The train was entering Parsons Green station in leafy southwest London, heading toward the city's center, when the bomb burst into flames around 8:20 a.m. local time.
Armed police are this afternoon raiding a house in Surrey hours after arresting the 18-year-old man believed to have planted the Parsons Green bomb.
"We now assess that this was a detonation of an improvised explosive device", London's Metropolitan Police Assistant Commissioner Mark Rowley said at a news conference.
Several victims were taken to hospital, though health authorities said none were in a serious life-threatening condition.
Photos on social media showed a white bucket on fire inside the train.
A Metropolitan Police spokesperson said: 'Residents in the buildings immediately surrounding the address are also being evacuated as a precautionary measure.
Stay with Northern Michigan's News Leader as we work to bring you the latest details on this terrorist incident.
The declaration came just moments before United Kingdom prime minister Theresa May announced the national terror threat level would be upped to the highest possible category, critical, which means "an attack is expected imminently".
The Islamic State group claimed responsibility for the bombing, according to the Associated Press.
It added: "We urge the public to be vigilant and to report any suspicious activity to the police by calling the confidential anti-Terrorist Hotline on 0800 789321 or in an emergency by dialling 999".
London's subway system has also been a target in the past, such as in 2005 when suicide bombers attacked three underground subway trains and a double-decker bus - killing 52 people and injuring more than 700.
USA intelligence and law enforcement sources told Reuters that the apparent failure of the bomb to fully detonate meant that the perpetrator was likely a self-taught bomb builder, perhaps inspired by ISIS but not a member of an organized group.
"I saw some people with burns, and things like that. I just don't see big shifts in "tactics" as what is happening these day", Fishwick said.
Witnesses say hundreds of people rushed to get out of the station.
Asked about Trump's comments later by British media, May said in London that "I never think it's helpful for anybody to speculate on what is an ongoing investigation".
Trump called the British Prime Minister "to offer his condolences over this morning's cowardly attack in London", a Downing Street spokesperson said.
A police spokesperson told CNN that Trump's comment is "pure speculation given we don't know who is involved". Officials had not declared the incident a terrorist attack at the time.
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