The footage shows a number of injured riders on the ground before a number of heavily armed cops arrive on the scene.
Witnesses told of horror scenes as the car driving "up to 50mph" crashed outside Parliament just after 7.30am.
Eyewitness Jason Williams said: "Someone driving towards Parliament at speed, it wasn't a minor accident, it wasn't a road traffic incident.
"It was, in my opinion, something planned and something very sinister."
Another witness Ewalina Ochab added: "I think it looked intentional – the car drove at speed and towards the barriers.
This is what we know so far…
- A car crashed into anti-terror barriers outside the Houses of Parliament at 7.40am
- Several people have been hurt – but cops say none have life-threatening injuries
- Witnesses saw a silver car "deliberately" travelling towards Westminster at 50mph
- It has been confirmed as being taken on by the Met's Counter Terror team
- A man in his 20s was handcuffed at the scene, led away by armed cops and arrested on suspicion of terrorist offences
"I was walking on the other side (of the road). I heard some noise and someone screamed.
Cops have since confirmed the Met's Counter-Terrorism Command is leading the investigation, after a man in his 20s was arrested on suspicion of terrorist offences.
A London Ambulance spokesman said two people were taken to hospital – but none are thought to have life-threatening injuries.
Dramatic footage after the crash shows heavily-armed police pointing rifles inside a silver car after it crashed into black barriers.
Mr Williams later told ITV's Good Morning Britain that the incident was "very, very scary".
He said: "I’ve seen a man driving a vehicle, and he's gone into one of the bollards. There was a loud bang.
"Straight away I thought 'Oh no, this is another terrorist attack'. So I’ve just started to run and the police were saying 'get out, get out of the area'.
The area has now been placed on lockdown with Parliament Square evacuated and dozens of emergency vehicles in attendance.
Mayor of London Sadiq Khan tweeted: "I’m in close contact with @MetPoliceUK Commissioner about the incident at Parliament Square this morning. Thank you to the first responders who were on the scene so quickly."
Bus driver Victor Ogbomo, 49, was driving passengers past the front of Westminster when he saw the crash.
"All I saw was the smoke coming out of a vehicle, a silver vehicle … I just stopped the bus," he said.
Armed police were heard shouting "move back as quick as you can, we're asking you for a reason" as they swarmed through Westminster.
Witnesses reported seeing a woman sitting in a foil blanket in the road being treated by paramedics.
The dramatic crash unfolded live on Good Morning Britain, as a Frank Bruno interview was interrupted to show the immediate aftermath.
The incident comes just over a year after terrorist Khalid Masood drove into pedestrians and rammed the gates of Parliament in a terror attack.
The jihadi killed five people including Westminster cop PC Keith Palmer before he was shot dead by armed police.
Security expert Chris Phillips told GMB: "I think one of the biggest issues for police officers when they approached the vehicle was could it explode.
"This could well be some form of an attack that’s not quite worked properly for the attacker. The whole point of those barriers is they are to stop and slow down any vehicles getting close to the building and people inside."
Streets around Parliament Square, Millbank and Victoria Tower Gardens have been cordoned off with dozens of police, ambulances and firefighters at the scene.
While Westminster Bridge has been closed to cars and pedestrians and nearby Lambeth Bridge is also to be shut imminently.
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