Counter-terrorism officers arrested three people after a vehicle explosion outside the Women's Hospital in Liverpool, northern England, left one person dead and another injured on Sunday, police said, adding that they were leading the investigation.
The police said a male passenger in the car was declared dead at the scene, while the driver, who was also a man, was injured and remains in hospital in a stable condition.
British interior minister Priti Patel said in a tweet she is being kept regularly updated on the incident.
Three men - aged 29, 26, and 21 - were detained in the Kensington area of the city and arrested under the Terrorism Act, the police said in a statement.
Police understood that the car involved was a taxi that pulled up at the hospital shortly before the explosion occurred.
Chief Constable Serena Kennedy said police were called to reports of a car explosion just before 1100 GMT on Sunday.
"Work is still ongoing to establish what has happened," she told media.
"We are keeping an open mind as to what caused the explosion but given how it has happened, out of caution, counter-terrorism police are leading the investigation supported by Merseyside Police."
The police said the explosion had not been declared a terrorist incident at this stage.