The Mail on Sunday newspaper claimed that extremists plan to explode a bomb in central London during events to mark the 70th anniversary of VJ Day - Victory over Japan - next weekend, which are expected to be watched by thousands of people.
The plot is being orchestrated from Syria by Islamic State commanders, the newspaper said, and includes a specific threat against the Queen, triggering a review of security arrangements.
Buckingham Palace refused to comment on the reported threat, but a police spokesman said the force constantly reviewed security plans for public events, “taking into account specific intelligence and the wider threat”.
He added: “Our priority is the safety and security for all those attending or involved. The public are encouraged to continue with their plans to attend or take part in events as normal.”
The spokesman insisted that Scotland Yard was on the look out for terror threats emanating from the UK and abroad.
The Queen and members of the Royal Family will take part in a series of events on Saturday, including a service for veterans and a fly-past at Horse Guards Parade.