Black smoke rises as a vehicle burns outside the Liverpool Women's Hospital after an explosion

Three people were arrested as police quickly moved to set up barricades after the car blast outside Liverpool Women's Hospital in the UK.

After a car blast outside Liverpool Women's Hospital killed one person, the UK police on Monday declared it a "terrorist incident".

Three people were arrested as police quickly moved to set up barricades as the blast took place on Sunday. The passenger in the car was declared dead while the driver was injured in the blast.

British counter-terrorism officers immediately began to investigate the incident along with local police as three men were reportedly detained in the Kensington area and then arrested under the Terrorism Act.

Britain's interior minister Priti Patel said the terrorism threat level in the country has been increased from "substantial" to "severe" after the car blast incident.

The police confirmed the improvised explosive device was made by the passenger.

The car was a taxi which had stopped in front of the hospital as it exploded. The blast occurred as Britain was observing Remembrance Day on Sunday.

The taxi driver was hailed as a hero after reports claimed he locked the passenger in the car after he grew suspicious. The passenger reportedly wanted to attend the Remembrance Day service where several people had gathered.

Prime Minister Boris Johnson said on Monday that the taxi driver "behaved with incredible presence of mind and bravery".