TWO people were being held under the Prevention of Terrorism Act last night following the Aldwych bus blast in which one man - believed to be an IRA member - died. A second man, who survived the explosion, was under armed police guard at St Thomas's Hospital.
Police refused to give any details about the injured man or to comment on speculation that the arrests were linked to letters recovered from the body found in the wreckage of the blast.
It is believed a weapon was also found at the scene. The IRA yesterday admitted responsibility for the bomb in which eight other people were injured. Mr Paddy Ashdown, the Liberal Democrat leader, reflected widespread British fury, saying Sunday night's bomb "put the final nail in the coffin of the ceasefire".
The bus was destined for Holborn in central London, home to several Ministry of Defence buildings. Sinn Fein had recently sought to locate its first ever UK headquarters in Holborn.
The driver of the 171 bus, Mr Bob Newitt (50) was said to be in a "stable but serious" condition at University College Hospital last night. Mr Rolf Hobart (38), who sustained serious face and head injuries, was still critical.
While Mr John Major vowed to "hunt down" those responsible for the current wave of London attacks, a republican source told Reuters that the IRA is likely to extend its campaign to other targets in Britain.
The newsagency report quoted the republican as saying: "If what is happening in London doesn't get the message home, the same signal will be sent by activity in other major British cities."
As the apparatus of security and surveillance was raised throughout London and elsewhere in Britain, Mr Ashdown expressed the widespread belief that Britons must brace themselves for a protracted bombing campaign.
Meanwhile, Ministers struggled desperately to keep the political show on the road and to establish their control of the peace process.
Mr Major and the Taoiseach, Mr Bruton, were holding their second telephone conference of the week amid renewed speculation that an Anglo Irish summit might be held next week.
Mr Major held more than 80 minutes of talks at Downing Street yesterday with the SDLP leader, Mr John Hume, and his deputy, Mr Seamus Mallon.
The Prime Minister then held emergency discussions with Northern Ireland ministers ahead of the Commons debate renewing the North's Emergency Provisions Bill. Mr Major will meet the Ulster Unionist leader, Mr David Trimble, later this morning.
But the seemingly irreconcilable agendas of the Ulster Unionists and the SDLP led to suggestions last night that any formula agreed by Mr Major and Mr Bruton would necessarily be limited.
Mr Major's talks with Mr Hume were officially described as "long and intensive". And Mr Hume said they were agreed on the objective of a negotiated settlement "involving all the parties".
However, The Irish Times understands the meeting was "extremely tough" and confirmed a continuing "stalemate" on the Prime Minister's plan for an "elected body" as a vehicle for future negotiations.
This morning Mr Trimble will impress on Mr Major the need to proceed with the elective process in light of the resumed IRA campaign. But his attitude to Irish Government proposals for Bosnian style proximity talks remains doubtful.
One suggestion circulating at Westminster last night was that the Taoiseach and Prime Minister might agree a proximity conference as an interim measure - and that Sinn Fein could be involved in such talks, at official level, despite the resumed IRA campaign.
Dr Mo Mowlam, the Shadow Northern Ireland Secretary, continued her push for compromise on all sides in a bid to break the impasse.
Speaking in the Commons, Dr Mowlam said the proposal for elections and Mr Hume's plan for a referendum "could be combined."
She said: "There could be a joint referendum [held north and south of the Border] and a Northern Ireland elective process to let the people speak both about the background to the talks and who they want to take part."
Stressing the need for widespread agreement if these or any other ideas were to work, Dr Mowlam said: "The Irish Government have proposed proximity talks, the Prime Minister has spoken of intensive talks. We believe there should be a first stage of intensive design talks so that, in the design of the negotiations, there is ownership among all the parties that take part."
Labour did not oppose the further renewal of the North's emergency provisions during last night's debate.