The phoney bombs were simply disposable water bottles wrapped in silver and black tape and attached to leather belts, although they were designed to create "maximum fear", police said.
Attackers Khuram Butt, Rachid Redouane and Youssef Zaghba each wore one of the bogus explosive devices when they launched a van and knife rampage that killed eight people and injured dozens more.
Metropolitan Police Commander Dean Haydon praised the bravery of the police officers and members of public who tackled the three - despite the possibility they could have been killed in an explosion.
He said: "I have not seen this tactic in the UK before where terrorists create maximum fear by strapping fake explosives to themselves. Anyone who saw them on the night would have thought they were genuine."
Butt, 27, Zaghba, 22 and Redouane, 30, were still wearing the belts when they were shot dead by armed officers within eight minutes of their marauding attack beginning.
Mr Haydon said it was hard to speculate to what end the attackers wore the belts, although it may have been to take hostages or as a defensive strategy.
He said: "It could be that they had plans to take the attack into a siege situation or it might be that they saw it as protection from being shot themselves," the officer said.
"It makes the bravery of those police officers and members of the public who tackled the terrorists even more remarkable.
"The belt would have been visible to them and if you are fighting back or aiming a shot at someone wearing the device, you would clearly be very aware that you could be caught in an explosion."
Sunday Express journalist Geoff Ho was severely wounded when he confronted the attackers after they smashed their way into a restaurant in Borough Market.
Writing in the newspaper, he described the moment three potential suicide bombers broke through a locked door.
"The terrorists were coming in and I saw that they looked like they had suicide vests on," he said.
"I couldn't just attack. If I charged at them, maybe I could take out one or two. But one of those animals could detonate and kill us all."
Inspector Jim Cole, one of the first officers on the scene as the attack began, described how he hid 200 revellers in a pub cellar amid fears suicide bombers were on the loose outside.
He said: "From updates on the radio, we were aware that people had got out the van and were attacking people in the market.
"I heard a number of shots started ringing out and a lot of shooting going on.
"At that point, I didn't know if the shots were us or potentially the attackers.
"Information came over the radio that they were wearing suicide vests."
As revellers returned to Borough Market in a show of defiance on Saturday, police revealed Butt tried to hire a 7.5-tonne lorry hours before the attack.
Detectives suspect the carnage inflicted could have been even worse if the ringleader of the terror gang had not failed to secure the vehicle because his payment did not go through.
Instead he resorted to "plan B" and rented a white van which ploughed into pedestrians.
After leaving the vehicle, the terrorists used 12in ceramic knives with pink blades in a stabbing spree.
Detectives made their 20th arrest in relation to the investigation on Saturday, with seven men now held in custody in connection with the attack.
Investigators have spoken to 262 people from 19 different countries in connection with the probe, 78 of whom are "significant" witnesses.
Of the 20 people arrested in connection with the probe, 12 have been released without charge.
One man arrested on suspicion of drugs and firearms offences was bailed until a date in late June.
Police still believe there are "many others" who witnessed the attack but are yet to come forward.
They were urged to contact the police in confidence on 0800 789 321 or visit gov.uk/ACT and complete a secure form.