Merseyside Police said the suspect was white, British and from the Liverpool area and it is understood Counter Terrorism Policing North West are supporting the force.
The Prime Minister described “appalling” scenes as witnesses described a people carrier ploughing into crowds of people who had been celebrating in the city centre.
Liverpool Football Club said it was in contact with the force and would “continue to offer our full support to the emergency services and local authorities who are dealing with this incident.”
Footage of the incident which was circulating online on Monday appeared to show the vehicle speed up as it veered into pedestrians on both sides of the street.
Officers surrounded the car very soon after, as witnesses attempted to stop the driver, who was eventually detained by police.
Emergency services were quickly at the scene and several casualties were seen being taken away by ambulances.
A large police cordon was put in place on Water Street and emergency vehicles could be seen lining the road.
A conscious man on a stretcher was seen being put into an ambulance and the paramedic told police he believed the Liverpool Royal Hospital may be overwhelmed.
Police lined the junction of Castle Street and Water Street and firefighters were also at the scene.
A large blue tent was erected in Water Street, with two fire engines parked in front. An ambulance incident unit was parked nearby before driving away.
A police van and car blocked Water Street, and other police vehicles were parked along The Strand.
Emergency vehicles including ambulances were allowed out of the cordon.
Harry Rashid, 48, from Solihull, was at the parade with his wife and two young daughters when he witnessed the collision.
“This grey people carrier just pulled up from the right and just rammed into all the people at the side of us.
He added: “It was extremely fast. Initially, we just heard the pop, pop, pop of people just being knocked off the bonnet of a car.”
Matthew O’Carroll, 28, from Runcorn, saw the car approaching the top of Water Street.
He said: “We were walking up Water Street and approaching the top of the road and the vehicle came past a parked police van at a decent speed.
“People managed to get out of the way as he was beeping as he went through but as he went past, people were obviously very angry and so started running after the car.
“The back window of the car was already smashed.
“I thought that once it went past us, it was just someone that was trying to get away from something and would slow down when he got to more people.”
Another witness, who was walking with a group of friends, said he saw a car “speeding up” and hitting pedestrians.
The man, who gave his name as Mike Maddra, told PA news agency the “car turned left, mounted pavement, come towards us and runs towards the buildings”.
He said “we got out the way and it was speeding up”.
Mr Maddra said he thought he saw two people being hit and added, “it looked deliberate” and “it has just ruined the day really”.
In a statement, Sir Keir Starmer said: “The scenes in Liverpool are appalling — my thoughts are with all those injured or affected.”
Liverpool City Region Mayor Steve Rotheram said in a statement: “Our hearts go out to all of those affected, especially those who have been injured. Thank you, as ever, to the first responders for their professionalism and swift action.
“This is a difficult day for our city region, but we stand together.”
Police restrained people who were “smashing” the car that hit crowds in Water Street, a witness said.
Daniel Jones, 28, told the Sun: “A lot of people were evidently really angry. They were smashing [the car] up. Police were trying to restrain them.
“The back of the window was completely smashed. Everyone was just jumping onto that car, trying to jump on that car because officers were trying to restrain them.
“They were ripping the register plate off. The back window was broken when the [driver] was still in it.”
A spokesman for the Premier League said: “Everyone at the Premier League is shocked by the appalling events in Liverpool this evening, and our heartfelt thoughts go out to all those injured and affected.
“We have been in contact with Liverpool FC and have offered our full support following this serious incident.”
