A number of people in Kidderminster were evacuated when "suspicious material" was found in connection with the arrest of a man in possession of knives and an axe outside an Army Reserve Unit.
Police later confirmed the material was not suspicious and residents were able to return to their homes.
The 23-year-old suspect was detained by armed police on Sunday night and remains in custody while inquiries continue.
Officers said there was nothing to indicate the incident is related to the terror attack in Finsbury Park, London, and that the man's motives are not yet known.
News of the arrest emerged after Security Minister Ben Wallace said he believed an Army location in the Midlands may have been targeted by an individual reported to be in possession of knives and an axe.
Mr Wallace told reporters:
"This is part of, I'm afraid, the unprecedented level of activity that we are seeing."
West Mercia Assistant Chief Constable Martin Evans said that it is believed that the suspect was acting alone.
He added: "I would urge people not to speculate on what has happened. As I am sure you will appreciate, this is an extremely sensitive investigation but I can assure you that we will make information available as and when it is appropriate."
West Midlands Counter Terrorism Unit and West Mercia Police are investigating the incident.
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