A lone bomber detonated a homemade device packed with nuts and bolts in the foyer of the Manchester Arena as thousands of young people were leaving a concert by US pop star Ariana Grande on Monday night.
The attacker has not been officially named but investigators believe they know his identity.
On Tuesday, the first arrest was made in connection with the inquiry.
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Greater Manchester Police said in a statement: "With regards to the ongoing investigation into last night's horrific attack at the Manchester Arena, we can confirm we have arrested a 23-year-old man in south Manchester."
One witness told how the man was detained by between six and eight plain-clothes officers in Chorlton.
As counter-terrorism agencies mounted a massive inquiry into the outrage - the worst terrorist attack since 52 innocent people were killed in the July 7 bombings in London in 2005:
:: The first victims were confirmed as eight-year-old Saffie Rose Roussos from Leyland and teenager Georgina Callander from nearby Chorley. Saffie was at the concert with her mother Lisa and Saffie's sister, Ashlee Bromwich, who is in her 20s
:: Theresa May denounced the "appalling sickening cowardice" of the suicide bomber
:: Many of the fifty-nine people hurt in the attack are being treated for life-threatening injuries. Twelve of those rushed to hospital were children.
:: Investigators believe they know the identity of the bomber and are working to establish whether he was acting alone or as part of a network
:: Police said the inquiry is "complex and wide-ranging" and cautioned against speculating on the attacker's identity
:: Donald Trump denounced those responsible for the atrocity as "evil losers" and pledged America's "absolute solidarity" with the people of the UK
:: Andrew Parker, the Director General of MI5, condemned the "disgusting attack" and declared that the agency remains "relentlessly focused" on tackling the "scourge of terrorism"
:: IS has frequently declared that it was behind terrorist incidents in recent years but experts have warned their claims should be treated with caution