Two men aged 20 and 22 were held on suspicion of terror offences after officers used an explosive device to gain entry to the property, Greater Manchester Police (GMP) said.
John Sentamu: Manchester – act of hate defeated by outpouring of loveYP Comment: Region’s debt to police officers. Respecting those who protect us from terroristsThe operation in the early hours of Saturday morning brings the number of suspects being held in custody to 11.
The development came as a vast security operation gets under way to protect hundreds of Spring Bank Holiday events across Britain this weekend.
More than 1,000 armed police are on standby as major spectacles, including the FA Cup Final at Wembley and the Premiership Rugby Final at Twickenham, are expected to draw tens of thousands of people into public spaces on Saturday.
Despite the country being placed on critical alert, police have urged people to go out and enjoy themselves.
Britain's senior counter-terror officer said "immense" progress had been made in the probe into the associates of suicide bomber Salman Abedi and a "large part" of his suspected network had been dismantled.
As the public was urged to carry on with planned activities against a background of heightened security fears:
* Details about the scale of a wider terror threat facing Britain emerged as figures indicated as many as 23,000 people have appeared on the radar of counter-terror agencies.
* The number of arrests in the Manchester probe reached 13, with one man held amid reports of armed police swooping on a bus travelling towards Manchester city centre.
* Eleven suspects, the youngest an 18-year-old man, remained in custody following days of intense police activity that saw a series of raids in Greater Manchester, Warwickshire and Merseyside.
* Metropolitan Police Assistant Commissioner Mark Rowley said some "key players" had been arrested in connection with the attack and investigators had made significant "finds".
* US singer Ariana Grande vowed to return to Manchester to play a benefit gig for fans caught up in the blast.
* Theresa May will chair a meeting of the Government's Cobra emergency committee in Whitehall on Saturday morning.
GMP said officers made the latest arrests as they executed a warrant at an address in Cheetham Hill, north of the city centre.
It followed searches at a separate property in Cheetham Hill and an address in the Longsight area in south Manchester
On Friday evening a 44-year-old man was arrested in the Rusholme area of the city. Witnesses reported seeing armed police storm a bus on its way to the town centre at around 7pm.
A shopkeeper said he hid up to six terrified passengers in the back of his Spar store on Oxford Road while armed police and uniformed officers attended the scene.
Twenty-two people, including seven children, were killed and scores injured when Abedi launched a suicide attack at Manchester Arena on Monday night.
The blast occurred minutes after Grande left the stage while her fans, many of them young girls, filed out of the venue.
On Friday she pledged to return to the city to hold a benefit concert to raise money for the victims and their families.
She also urged fans to donate to the Manchester Evening News fundraising appeal, which has raised more than £5 million.
Grande, 23, said: "Our response to this violence must be to come closer together, to help each other, to love more, to sing louder and to live more kindly and generously than we did before.
"We will not quit or operate in fear. We won't let this divide us. We won't let hate win."
The massacre was the worst terrorist atrocity to hit Britain since the July 7 attacks in London in 2005.
It led security monitors to raise the terror threat to critical, meaning an attack may be imminent, for the first time in a decade.
The Prime Minister also sanctioned Operation Temperer, allowing the military to be deployed to protect key sites, and the Changing of the Guard at Buckingham Palace was among events cancelled.
The ceremony resumed on Friday as Mr Rowley, the national lead for counter-terror policing, urged Britons to go about their business as usual.
Police forces across the country have reviewed security at more than 1,300 events and 1,100 armed officers are on hand to protect gatherings.
Mr Rowley told the public: "Enjoy yourselves and be reassured by the greater policing presence you will see.
"We can't let the terrorists win by dissuading us from going about our normal business."
The Duke of Cambridge and Labour leader Jeremy Corbyn are expected to head to Wembley on Saturday.
In Hull US star Katy Perry will perform amid tight security at Radio 1's Big Weekend, while in Manchester armed officers will patrol The Courteeners' concert at Old Trafford cricket ground, where fans were warned extra security checks will be in place.
On Sunday the Great Manchester Run will go ahead as planned, with defiant runners and spectators due to turn out in large numbers as the city recovers from the atrocity.
Activity in the Manchester probe is expected to continue throughout the weekend and investigators remained at at least 12 locations across the North West on Friday evening.
Mr Rowley admitted there were still "gaps in our understanding" of 22-year-old Abedi's network and said it will "take a little more time" to close them.
"We are working as fast as we can do because everyone wants answers to this," he said.
Among those in custody is Abedi's brother Ismail, who was arrested in Whalley Range, south Manchester, on Tuesday.
Two people, a 16-year-old boy and a 34-year-old woman, who were held as part of the probe have since been released without charge.
Counter-terror authorities are handling 500 investigations into 3,000 individuals currently, while it was disclosed on Friday that around 20,000 people are considered former "subjects of interest".
On Saturday morning, GMP said they had been carrying out searches at a third address in Cheetham Hill and a further property was being searched in Moss Side.
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