London - A man shouting "Allahu Akbar" (God is greatest) reached for a four-foot sword in his car and assaulted police officers outside Britain's Buckingham Palace on Friday night, police said.
Two officers suffered slight cuts as they detained the man, who was now being held by counter-terrorism officers, London's Metropolitan Police said.
The man drove at a police van in an area close to Queen Elizabeth's London residence, and stopped in front of the vehicle, police said. Unarmed officers confronted and arrested him, and said he had reached for the sword from his front passenger foot-well.
It was too early to say what the man was planning to do, said Commander Dean Haydon, the head of the Met's Counter Terrorism Command.
"We believe the man was acting alone and we are not looking for other suspects at this stage," he said. "It is only right that we investigate this as a terrorist incident at this time."
Europe has been on high alert following a string of militant attacks, including four this year in Britain which killed 36 people. The country's threat level remains at severe, meaning an attack is highly likely.
No members of the royal family were present in the palace, which is a magnet for tourists in Britain's capital in the peak August holiday weekend.
The suspect was initially arrested on suspicion of grievous bodily harm and assault on police. He was then further arrested under Britain's Terrorism Act.
Police said they were investigating a 26-year-old man from the Luton area, an ethnically diverse town 55 km north of London where police have carried out investigations linked to other militant attacks, including one earlier this year on London's Westminster Bridge.
"My partner saw a sword (...) as well as a policeman with blood on him, looking like his hand or chest was injured. The police officer had it in his hand, walking away with it," said an unnamed witness quoted by The Times newspaper, who said tourists were running away from the scene.
"Something happened before, which is why the people ran away. I'm not sure what this was. But people were already scared and I saw the policeman pull the man from the car" the witness said.
The suspect was taken to a London hospital for treatment of minor injuries, and there were no other reported injuries.
Police appealed to witnesses to come forward with any further information on the incident.
"This is a timely reminder that the threat from terrorism in the UK remains severe," Haydon added. "The police, together with the security services, are doing everything we can to protect the public and we already have an enhanced policing plan over the Bank Holiday weekend to keep the public safe."