Sky News and the British Broadcasting Corp. said sources had linked the investigation to convicted "shoe bomber" Richard Reid, a Briton who tried but failed to ignite explosives-packed shoes aboard an American Airlines flight to Miami on Dec. 22, 2001.
The reports gave no details of the supposed connection. "They are looking at possible links, they haven't definitely linked him yet," said BBC reporter Frank Gardner.
London's Metropolitan Police, which assisted in the investigation, said officers recovered a "relatively small amount" of what was described as "explosive material." Police gave no further details.
"It is the belief of the security and (police) Special Branch services that this man has connections with the network of al Qaeda groups," Home Secretary David Blunkett told British Broadcasting Corp. radio. "That is why he has been arrested under the Terrorism Act 2000."
Police said they arrested the 24-year-old man at his home in the western city of Gloucester on Thursday and evacuated nearby buildings while they searched for explosives.
"We are confident that there is no longer a danger posed by explosives on the premises and work will begin to allow the local community to return to their homes as soon as is possible," police said.
Ibrahim Master, chairman of the Lancashire Council of Mosques, said the man arrested in Gloucester had been a student at the College of Islamic Knowledge and Guidance in Blackburn, northern England. Master said religious leaders were assisting police in a search of the college and adjoining mosque.
Police also arrested a second man, aged 39, in Manchester, northern England, on suspicion of terrorist offenses.
Both men were arrested under section 41 of the Terrorism Act "on suspicion of involvement in the commission, preparation or instigation of acts of terrorism," Gloucestershire and Greater Manchester police said.
"We would not have taken these steps had we not believed that this individual posed a very real threat to the life and liberty of our country," Blunkett told CBS News Correspondent Tom Fenton.
London's Metropolitan Police said its anti-terrorist officers took part in both operations but wouldn't say if they were related and didn't disclose the suspects' nationalities.
Blunkett had said there was concern the suspect in Gloucester had explosives.
"Obviously the forensic evidence will be absolutely crucial here and I do not want to in any way damage the future trial," he told the BBC. "But we would not have taken these steps if we did not believe that this individual posed a very real threat to the life and liberty of our country.
Police evacuated 119 homes near the suspect's address in Gloucester, Chief Inspector David Peake said.
A spokesman for the Metropolitan Police said officers also searched two houses in Blackburn, northwestern England, and evacuated one of them. The force said no arrests were made and added that the operation was connected to the raid in Gloucester, but gave no further details.
Reid was sentenced to life in prison in January by a U.S. judge in Boston.