Also on Wednesday, British Prime Minister Tony Blair got support from his Spanish counterpart in playing down a suggested link between the London attacks and the US-led invasion of Iraq. Blair offered his backing in an "alliance of civilisations" to counter terror.
Commenting on the arrest, Blair said: "I think it is an important development ... obviously we are greatly heartened by the operations today."
The man, named in media reports as suspected bomber Yasin Hassan Omar, was one of four men detained in dawn raids in the central English city of Birmingham. He was taken to a top security police station in London.
Police who swooped on the house in Birmingham's Hay Mills used a stun gun on the man, temporarily disabling him with an electric shock, and discovered a suspect package.
Omar, 24, is wanted over an attempted attack on Warren Street underground station, one of four failed bombings on July 21. He came to Britain from Somalia as a child.
Although police declined to identify the man taken to London, a police source said, "The arrest is much more significant than the other three."
The botched bombings on 21 July came exactly two weeks after four bombers killed 52 people and themselves in a similar attack on London's transport system. Police have linked the suicide bombers to al-Qaida.
A car rented by one attacker was
said to have 16 bombs
The American TV channel ABC, citing investigation sources, said detectives investigating the bombings on 7 July had found 16 ready-made bombs in a car rented by one of the attackers.
Some were shaped like pancakes and packed with nails to act as shrapnel, ABC said.
The BBC said the arrested man wore a rucksack. The bombers in both sets of attacks carried bombs in rucksacks, police said.
The three other men were detained at another address in the Birmingham area and were taken to a local police station.
Police last week published photos of the four main suspects in the 21 July attempted attacks from images captured on security cameras and appealed to the public to report any sightings but not approach the men.
Newspapers reported on Wednesday that another prime suspect had served a jail sentence for knifepoint robberies.
Mukhtar Said Ibrahim, 27, wanted over an attempt to plant a bomb on a bus in last week's failed attacks, was jailed for five years in 1996 for mugging people when he was part of a teenage gang, the Daily Telegraph said.
The Home Office (interior ministry) said Ibrahim arrived in Britain from the East African country of Eritrea in 1992. Omar and Ibrahim came to Britain as child refugees from East Africa.
The investigation was dealt a public relations blow last week when undercover police officers shot dead a Brazilian electrician at a London Underground railway station, mistaking him for a bomber.
Before the body of Jean Charles de Menezes was taken home to Brazil on Wednesday, the lawyer representing his family said: "A man has died who has committed no crime."
"There is ... very little public discussion as to whether those who killed him themselves committed a crime," Gareth Peirce told reporters.
Blair says he will back Spain's
planned "alliance of civilisations"
In a joint news conference with the UK's Prime Minister Tony Blair, Spanish Prime Minister Jose Luis Rodriguez Zapatero played down the linking between London bombings and Iraq, providing backup to Blair's approach.
"Beyond the position that each country has adopted on Iraq, I must say that the risk is global, as we have just seen in the bombing in Egypt," said Zapatero.
Blair has lashed out at critics who say Britain's participation in the US-led war in Iraq has made the country more of a target.
Opinion polls taken after the 7 July bombings on London's transportation network show a majority of Britons believe Iraq has been a factor.
"The terrorist threat is a terrorist threat to all," said Zapatero. "This threat from radical Islamic terrorism affects us all equally."
Zapatero's Socialist government ordered the withdrawal of Spain's 1300 troops from Iraq shortly after taking power in March 2004.
Many Spanish voters saw that troop presence as a motive in the Madrid train bombings, which were blamed on Muslims linked to al-Qaida.
That attack, which came just days before the Spanish election, killed 191 people.
Alliance of civilisations
Last year, Zapatero outlined plans for an "alliance of civilizations" to help bridge misunderstandings between the West and the Arab and Muslim world. He said Wednesday he had asked Blair to help carry the proposal forward in the framework of the United Nations.
"There is ... very little public discussion as to whether those who killed him themselves committed a crime,"
lawyer of the Brazilian killed by British police
Blair said he supported the idea.
"The idea of Spain and Turkey and other countries coming together to give a clear statement of solidarity across the religious divide I think is very very important and I would be very surprised if people did not support this everywhere, I am sure they will," Blair said.
Blair said Britain's strategic policy in Iraq - to reduce troops as Iraqi forces become more capable - remained unchanged.