Armed police swooped on a street in Wigan as they made the fifth arrest in the investigation into the Manchester bombing.
The town centre was in lockdown as officers carrying automatic weapons carried out the raid.
Witnesses say a man was tackled to the ground in Upper Dicconson Street after he was seen with a suspicious package.
Photos shared on social media appear to show him being led away by plain clothes officers with their faces covered wearing black police caps.
Wigan Council warned people to avoid the area because of an “ongoing police incident”.
A nearby nursery, Little Acorns, was put into lockdown and warned parents not to come to collect their children.
“We are currently on lock down due to an incident in the area,” a statement on its Facebook page said.
“We are safe. All children are upstairs. Please DO NOT come for your children at little Acorns you will not get in.”
Greater Manchester Police said: “We have made an arrest in Wigan this afternoon in connection with the investigation into the horrific incident at Manchester Arena.
“The man was carrying a package which we are currently assessing, a police cordon remains in place while this is carried out.”
An officer in a white forensic suit is examining a red bag which the suspect was carrying, according to one witness, who did not want to be named.
“There was a lot of officers coming in with a few cars from different directions,” the restaurant owner said.
“They wrestled with a man on the floor and he had a red bag.
“Now there’s a man in a white suit looking in the bag - he’s taking something out of it.
“They’ve sealed the whole area off, put tape around the perimeter.
“My restaurant is in the middle of it and I can’t open my front door.
“There were a lot of armed officers with their faces covered - with balaclavas and machine guns.
“They told us to get in, lock the windows and close the doors.”
He said he has not seen the arrested man before, and added: “We’ve never had something like this happen here before - hopefully it’s a one-off.”
Soufiane Hamdadou, the owner of nearby restaurant Fat Olive, said he saw armed police on the street at about 3pm.
He said: “I heard shouting and screaming and looked out of the window and saw a man getting wrestled down to the ground.
“It was undercover police and they were armed with balaclavas on.
“They circled the man and took him away.
“The man had a red bag and the police sealed off the whole area and moved the bag to the other side of the road.
“A man in a white forensics suit was looking at it and then I think they took the bag away.”
Mr Hamdadou said he was told to stay inside and only allowed to come out of the building again after 6.30pm.
Some residents reported seeing a bomb disposal unit on the scene.
Joanne McKnight, 46, said she returned to her home on Dicconson Street, off Upper Dicconson Street, just before 4pm and found it cordoned off.
She said: “The police escorted us back to the house and told us to stay inside until things started clearing.”
The police cordon was removed at about 7pm.