Reuters report that British anti-terrorist police suspected a chemical bomb plot was linked to the house raided two days ago as officers questioned two men, one of them in hospital after being shot.
Police siezed the men on Friday after 250 officers, some in bio-chemical protection, stormed the east London home.
Their intelligence sources believed the house was being used to make a toxic bomb for an attack in Britain, police sources claim.
One of the suspects, a 23-year-old man, was shot during the dawn raid and is recovering in hospital.
British firearms police have been under the spotlight since they shot dead an innocent Brazilian man, Jean Charles de Menezes, in the weeks following last year's suicide bombings in the capital. They wrongly identified him as a suicide bomber.
Friday's raid was one of the biggest operations since the July attacks.
Police said officers were seeking "some form of viable chemical device" that could kill - a conventional bomb laced with toxic material.
Both suspects are being held on suspicion of the commission, preparation or instigation of acts of terrorism but denied any links with a terrorism plot through their lawyers.
Asan Rehman, a spokesman for a family that was arrested from a neighbouring house but then freed, told Reuters the two men in detention were Muslim brothers of Bangladeshi origin. Neighbors described the men as friendly and "very religious".
Police have admitted nothing suspicious has been found at the House during their three day search.
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