Police were last night continuing to question a man who was arrested after giving himself up without anyone being injured.
It was reported that the man had entered a building in busy Tottenham Court Road with gas canisters strapped to him and had taken hostages.
The scare sparked a major alert as both Goodge Street and Warren Street Tube stations were closed, businesses evacuated and one of the capital’s busiest shopping streets shut.
The suspect was removed from Shropshire House by police officers, who then carried out a search of the building.
Commander Mak Chishty, of the Metropolitan Police, said the 48-year-old suspect was a local man.
He confirmed that no hostages were inside the building when the man left, after negotiators had been sent to the scene.
The officer said police were concerned that the suspect had explosives or flammable materials.
The search of the scene would continue until officers were sure it was safe to reopen it, Commander Chishty added.
Police received emergency calls at midday amid reports that the man was holding people captive inside the building, several floors above ground.
Pictures emerged of computer and office equipment apparently being thrown through one of the office windows.
Abby Baafi, 27, the head of training and operations at Advantage Training Services, a company which offers HGV courses, said the man targeted her offices and held four men hostage.
In a YouTube video made by Stephen Hull, executive editor of the news website Huffington Post UK, Ms Baafi said the man, who called himself Michael Green, entered her office.
“I recognised him because he was one of our previous customers, but he is not quite stable – mentally stable,” she said.
“He turned up, strapped up with gasoline cylinders, and threatened to blow up the office.
“He said he doesn’t care about his life. He doesn’t care about anything, he is going to blow up everybody.
“He was specifically looking for me but I said: ‘My name’s not Abby’ and he let me go.”
Ms Baafi said the man had failed the HGV training course and wanted his money back.
Sarah O’Meara, who also works for the Huffington Post, said the website’s offices in nearby Capper Street were evacuated after the alert was raised by a woman who ran into the building.
“A woman ran in off the street saying: ‘There is a guy with a bomb and he is threatening to blow himself up’ and that we needed to evacuate,” she said. “Everyone got out.”
John Lillis, a consultant at furniture shop Designer Sofas, witnessed the incident unfold from the back of his showroom.
“The buses had been stopped and there was an ambulance crew there, as well as police cars,” he said.
“The road was then cordoned off. The police asked us to move to the back of the showroom.
“I looked across the road to an office block opposite our showroom, and I saw computer screens and computers come out of the window, and then a filing cabinet.
“About half an hour after it all started, we were asked to move behind the cordon on Goodge Street, and it has moved back further since then.”
Asked if he could see who was throwing the items out on to the street, he said: “All I saw was someone in a shirt, I couldn’t see him or her.”
It is not known how the suspect arrived at the scene, whether by vehicle or on foot.
Scotland Yard was unable to go into details of whether witnesses had seen him walk to the building or whether they were looking for a vehicle possibly connected to him.