A terror attack on a group of worshippers near a mosque was "quite clearly an attack on Muslims", Metropolitan Police Commissioner Cressida Dick has said.
One man died after pedestrians were targeted by a man driving a van near Finsbury Park Mosque in north London early on Monday.
A 47-year-old man who was arrested over the Finsbury Park attack has been further arrested on suspicion of the commission, preparation or instigation of terrorism including murder and attempted murder, Scotland Yard said.
Witnesses described hearing the man, who was detained by members of the public at the scene, shout: "I'm going to kill Muslims."
The suspect, described as a large white man, was arrested by police on suspicion of attempted murder.
Ms Dick said: "This was quite clearly an attack on Muslims who looked like they were probably Muslims and they were coming from a prayer meeting. We treat this as a terrorist attack.
"Sadly we have suffered a number of attacks and very sad events over the last few weeks," she added.
She spoke as Security Minister Ben Wallace confirmed the man was not known to the security services.
He told BBC Radio 4's World At One: "What I can say on this case is this individual, so far as we know at the moment, was not known to us, but we are aware of a rise in the far right."
The attacker, who is believed to have acted alone, struck as the area was busy with worshippers attending Ramadan night prayers at the mosque.
Prime Minister Theresa May condemned the incident as "every bit as sickening" as the recent atrocities in London and Manchester.
After meeting faith leaders at Finsbury Park Mosque on Monday afternoon, she said: "The terrible terrorist attack which took place last night was an evil borne out of hatred and it has devastated a community.
"I am pleased to have been here today to see the strength of that community coming together, all faiths united in one desire to see extremism and hatred of all sorts driven out of our society.
"There is no place for this hatred in our country today and we need to work together as one society, one community, to drive it out, this evil which is affecting so many families."
Police and community leaders have praised those who restrained the van driver and stopped others from attacking him before police arrived.
Imam Mohammed Mahmoud was hailed for his efforts to calm the chaotic situation in the aftermath of the attack and was said to have used his body to shield the suspected terrorist from the fury of onlookers.
Witnesses said the suspect was smiling and waving as he brought carnage to Seven Sisters Road, with video posted online showing him give a nonchalant wave as police put him in the back of their vehicle.
Other footage showed a scene of chaos as people could be heard shouting and screaming amid the chaos, with bloodstains visible on the pavement.
One witness described being surrounded by bodies in the wake of the incident outside the nearby Muslim Welfare House.
Another witness, who wanted to be identified as Abdulrahman, which is not his real name, told the Press Association: "I managed to get the driver of the van.
"He wanted to run away and was saying 'I want to kill Muslims.'
"So he came back to the main road and I managed to get him to the ground and me and some other guys managed to hold him until the police arrived."
Abdulrahman claimed the driver said "Kill me", as he was being held on the ground.
He is also alleged to have told the injured: "You deserve it."
Officers were in the immediate vicinity as the attack unfolded and responded within one minute.
Police declared it a terrorist incident within eight minutes.
After chairing a meeting of the British government's Cobra emergencies committee earlier, Mrs May said the attack was "every bit as insidious and destructive to our values and our way of life" as the recent string of terror attacks apparently motivated by Islamist extremism.
"We will stop at nothing to defeat it," she added.
Eight people were taken to hospital, with one since discharged, while two others were treated at the scene.
All of the casualties were Muslims.
Police said it was too early to say if the man who died did so directly because of the attack, as he was already receiving first aid from the public at the scene when it happened.
Metropolitan Police Deputy Assistant Commissioner Neil Basu thanked members of the public who detained the suspect, saying "their restraint in the circumstances was commendable".
He added: "Given the methodology and given what was occurring, what's happened, the tragic incidents across the country, this had all the hallmarks of a terrorist incident.
"That is why the counter-terrorism command were called out to investigate."
Images of the van showed it was rented from Pontyclun Van Hire in Pontyclun, near Cardiff.
South Wales Police are working with officers from London on the investigation.
Communities and Local Government Secretary Sajid Javid also visited the scene and said he will seek advice from the local community as to what measures the authorities can take to give Muslims across the country "maximum reassurance" that they are being protected.
"The perpetrator of this attack - and those terrible attacks that we saw recently in Manchester and London - their intention is to seek to divide society. My message to them is that they will always, always fail," he said.
Flowers have been laid near the scene, with one card reading: "This is an attack on all Londoners - and on my community."
Another read: "I was so sorry to hear the news this morning. #NotInMyName".