Police later confirmed armed officers had killed three suspects in Borough Market. They said the canisters appeared to look like suicide bomb vests, but early reports suggest they did not contain an explosive.
The image, taken by a documentary photographer, shows the man on the ground outside the Wheatsheaf pub in Borough Market near London Bridge.
The suspected terrorist appears to be wearing an Arsenal football shirt.
Gabriele Sciotto, who took the photograph, told the BBC: “I ran towards the scene, noticed these men with explosive looking belts on their chests.
“They were running and police officers were trying to put themselves between the men and the crowd. Police ran towards them, more police came, and in a few seconds after a radio call, they shot three men down.
“The canisters didn’t look real, they looked like toys, I wasn’t too scared.
“I was simply in a bar watching the football, I was looking for the truth of this situation. You don’t realise how scary these situations can be. A policeman could have shot me I was very close.”
The photo appears to show a suspected terrorist with canisters attached to his body
Three men with knives allegedly smashed the windows to target people at the Wheatsheaf.
Seven people were killed and at least 48 injured after a van drove into pedestrians on London Bridge and the attackers then started randomly stabbing passers-by in Borough Market just after 10pm on Saturday.
A British Transport Police (BTP) officer, who was on duty, was one of the first on the scene after he responded to calls for help from the public, the force said.
London Bridge terror: Scenes as armed police respond Sun, June 4, 2017
At least two people have died after being after reportedly being struck by a van on London Bridge on Saturday night.
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Armed police responding to the incident at London Bridge
BTP said in a statement: “He received injuries to his head, face and leg, which, at this time, are believed to be serious but not life threatening.”
“The officer is currently being treated in a central London hospital and his family are with him while he receives treatment.”
The Prime Minister described the incident as a dreadful event.
The suspected terrorist appears to be wearing an Arsenal football shirt
Theresa May said: “I can confirm that the terrible incident in London is being treated as a potential act of terrorism.”
US President Donald Trump spoke to Mrs May to offer his condolences for the “brutal” terror attack, the White House said.
He has also tweeted condolences and support.
Morning after London attack: Heightened police presence at Borough Market & Bridge Sun, June 4, 2017
SIX people have been killed after a horrific terror attack targeted London Bridge and Borough Market on Saturday night. These are the pictures are London wakes up to the tragic scenes
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Armed response units promptly attended the scene and some brave officers ran in armed with a baton
Early reports suggest 48 people were taken to hospitals with injuries following the attack
Mr Trump wrote: “Whatever the United States can do to help out in London and the UK, we will be there – WE ARE WITH YOU. GOD BLESS!”
Labour leader Jeremy Corbyn called the attacks in London “brutal and shocking”.
He wrote on Twitter: “My thoughts are with the victims and their families. Thank you to the emergency services."