No information was given about the target, but the head of Scotland's Yard's anti-terrorist branch said the arrests came during an investigation of "dissident criminal Irish republican terrorist groups."
"We arrested three men this evening and they were found to be in possession of explosive devices," Deputy Assistant Commissioner John Grieve said. "We believe these terrorist devices were intended to be used in London within minutes."
A fourth person, a woman, was arrested later near Oxford Street, one of the capital's busiest shopping districts, police said.
Another man and woman were arrested about a mile away, near London's new British Library on Euston Road, Scotland Yard said, bringing to six the number of people held in London by the Anti-terrorist Squad. They have been taken to a London police station for questioning.
Police have warned that a real threat remains to the Northern Ireland peace agreement from splinter groups that do not recognize the cease-fires agreed to by the province's major paramilitary groups.
The London raid was part of a joint British-Irish operation against militants opposed to the Northern Ireland peace agreement, according to Scotland Yard. Four arrests also were made in the Irish Republic.
The three men arrested in London with the explosives were believed to be posing as students. They were arrested near university buildings, and the areas were sealed off while authorities searched. Underground rail stations also were cleared.
A police spokesman, speaking on condition of anonymity, said only that the men had "a number of ready-made explosive devices."
Police said armed officers had been used but no shots were fired and no one was injured during the operation. British police normally do not carry guns.
Scotland Yard said the operation was continuing and a number of addresses were being searched.
The London arrests followed raids by police in Dublin, Wexford, and Dundalk, Ireland.
In Dundalk, 5 miles south of the Northern Ireland border, police uncovered two shotguns, bomb components and false documents in an apartment and arrested a man.
A woman and another man were picked up in Dublin. A fourth arrest was made in Wexford.
The Irish police operation has been under way for months. Information uncovered in the Dundalk and Dublin raids prompted Irish police to contact their London counterparts.
Irish Republican Army members opposed to the outlawed group's July 1997 truce have broken away to form a rival command nicknamed "RIRA," or Real IRA. Most of the dissidents come from the Irish Republic.
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