A 25-year-old man suspected of stabbing three people with a kitchen knife at Manchester Victoria train station on New Year's Eve was being held and assessed for mental health issues on Tuesday, police said.
Greater Manchester Police were, however, continuing to investigate the attack because of suspected links to terrorism, they said in a statement. A raid of the man's home in the city's Cheetham Hill area was still taking place.
The man's name has not yet been released and police did not return requests for further information.
A witness, a BBC producer who was at the busy station full of New Year's Eve revelers, said a man stabbed several people at the station, shouting "Allah" and linking his actions to "bombings in other countries."
The station is very close to Manchester Arena, where a suicide bomb attack in May 2017 killed 22 people as they left a concert by pop star Ariana Grande.
Those wounded, a woman and a man in their 50s, were in a serious but not life-threatening condition, police said. The other, a male police officer in his 30s who sustained a stab wound to his shoulder, was released from hospital earlier.
"The Counter Terrorism investigation remains ongoing," police said. "There is nothing to suggest the involvement of other people in this attack, but confirming this remains a main priority for the investigation."
Earlier, Chief Constable Ian Hopkins praised officers at the scene for their bravery in arresting the suspect within minutes.
Hopkins said many people would have been affected by Monday's attack, particularly since it happened so close to the scene of the 2017 bombing. "I believe that makes it an even more dreadful attack for our city," he told reporters.
Britain is on its second-highest threat level of severe, meaning an attack is considered highly likely. Security officials say they are facing record levels of work in countering Islamist militants as well as far-right extremists after four major attacks last year.
Sam Clack, the BBC producer who witnessed the attack, told the broadcaster: "I just heard the guy shout, as part of a sentence, 'Allah'."
"I heard the man say, 'As long as you keep bombing these countries this is going to keep happening'," Clack told BBC 5 Live radio in another interview. "It was very, very scary."
Prime Minister Theresa May said on Twitter: "My thoughts are with those who were injured in the suspected terrorist attack in Manchester last night. I thank the emergency services for their courageous response."
Theresa May tweet: My thoughts are with those who were injured in the suspected terrorist attack in Manchester last night. I thank the emergency services for their courageous response.