Armed police carried out two raids on Friday in west London in their hunt for the bombers behind the failed attacks on the city's underground trains and a bus a week ago, police say.
A witness in Notting Hill said police - hunting three would-be bombers - had their guns trained on a man and were ordering him to remove his clothes and leave the building.
"They've got guns pointed up and they're telling him to get his clothes off and come down," she said by telephone.
On her phone, viewers could hear police shouting for the suspect to leave the apartment. Calling the man Mohammed, they told him if he did so, he would be safe.
Police were also laying siege to a property in nearby White City.
One of London's busiest stations was also evacuated on Friday as armed police made arrests, a spokesman for the British Transport Police said.
"Liverpool Street station has been evacuated and armed Metropolitan Police officers have made some arrests," he said.
Police sources said the operation targeted at least one of three suspected bombers still at large. The fourth was arrested on Wednesday.
A reporter said he understood one person had been arrested in Friday's operation.
The manhunt is one of the UK's
biggest police operations
A spokesman at Scotland Yard police headquarters said: "We are in the early stages of an armed operation."
"It's in connection with the attempted bombings on 21 July and cordons are in place as a precaution," he added.
Police are still chasing three of four men who tried to detonate bombs in failed attacks on 21 July, exactly two weeks after a team of suspected bombers killed themselves and 52 other people in London.
Local resident Martin Pendergast said: "Police have sectioned off my estate and the Sutton estate."
He said he had heard some sort of blast. "It sounded like a kind of version of a firework mixed with a shotgun," he added.
"I am quite sure the net is closing"
Metropolitan Police Commissioner
Another witness reported up to six explosions and said he had been told by police they were caused by stun grenades.
Police specialists in forensic suits were seen preparing to enter a housing estate in the Ladbroke Grove area.
Police have been under pressure to exercise caution after they shot dead Brazilian Jean Charles de Menezes in London last Friday because they mistook him for a bomber.
London's police chief Ian Blair said he was devastated for the man's family but defended the shoot-to-kill policy with bombers.
In the biggest manhunt ever undertaken by British police, Blair said he was confident the three would-be bombers on the run would be caught.
"How soon it will be, I don't know. But I am quite sure the net is closing," he said.
Police are reviewing 15,000 closed-circuit television tapes, have taken 1800 witness statements and received 5000 calls on their anti-terrorism hotline.