Police have arrested a third man in south London as part of their investigation into the attempted bombings of three subway cars and a bus on 21 July, an official said.

The man was arrested late on Saturday in the same area as two other men and in the same neighborhood where a Brazilian electrician, mistakenly killed by police, had lived.

The man was arrested "on suspicion of the commission, investigation or preparation of acts of terrorism," said a police spokeswoman on customary condition of anonymity.

He was taken to a central London police station for further questioning, the spokeswoman said.

Two men were arrested on Friday in the south London area of Stockwell, one subway stop away from the Oval Tube station, which was one of those targeted in the 21 July bombing attempts.

Also in Stockwell on Friday, police shot and killed 27-year-old Jean Charles de Menezes, mistaking him for a terrorist. Authorities acknowledged the mistake on Saturday and expressed "deep regrets".

The latest arrest was made in nearby Tulse Hill, where Menezes had shared a flat with cousins, the police spokeswoman said.

Police also said they raided a home in Tulse Hill on Saturday, but it was not immediately clear whether that was when the third suspect was arrested.

The police declined to comment further.

PHOTO CAPTION

A policeman secures an area in Regent Street in London after a suspicious bag was found. (AFP)