Police raided London's area of Notting Hill seeking suspects in the July 21 failed bombings.
Helicopters buzzed overhead and police cordoned off a number of streets in the Portobello Road area.
"We can confirm that an armed operation is currently in progress" with regard to July 21, London's Metropolitan Police said. "This operation is in its very early stages. Cordons are in place as a precaution."
Witnesses said they heard at least one large explosion and said heavily armed police were seen in the area, some wearing gas masks while others were in forensic suits.
British broadcasters reported that the explosion could have been used by police to gain entry to the home and Sky News Television reported one arrest.
"We've had loads of police cars flying up," said one witness, John Athanasiou, who works at a nearby estate agency. "There's been a helicopter overhead as well."
One witness, who did not give his name, said that "I put my head out the window ... and the policeman said get to the back of the building."
Attackers failed on July 21 to blow up three subway trains and a bus. A week earlier, similar and apparently linked attacks on three other subway lines and another bus killed 56 people, including four suicide bombers.
One of the four men suspected of carrying out the July 21 attacks was arrested in Birmingham, central England, on Wednesday. Yasin Hassan Omar, 24, was being questioned at a top-security police station in London, the AP reports.