At least 41 flats were evacuated and 60 firefighters attended to the explosion.
Both men who were arrested were taken to hospital for treatment, the Metropolitan Police said.
The emergency services are at the scene following a blast in Ardleigh Green Road, Hornchurch, at around 5pm on Monday.
Two people at the scene were taken by London Ambulance Service to an east London hospital.
Another two people are currently being treated at the scene and one person has presented themselves at a hospital with injuries.
A police spokeswoman said: “Police were called at 5:14pm to reports of an explosion at a block of flats in Ardleigh Green Road. Hornchurch.
“Officers, the London Fire Brigade and the London Ambulance Service are currently at the scene.
Around 60 firemen are at the scene of the explosion
Dozens of firemen are at the scene of the blast
Emergency services are at the scene in Hornchurch, Essex
Officers, the London Fire Brigade and the London Ambulance Service are currently at the scene
Get Quotes on Home Insurance
“We await an update as to the number of people injured.
“At this early stage officers are unable to confirm the cause of the explosion but enquires are underway.
“Residents are in the process of being evacuated from the building. The local authority has been informed.
There maybe long delays A127 Alrdleigh Green area. Please bare with us while we all work hard to deal with the incident #bteam
— Havering MPS (@MPSHavering) January 23, 2017
The block of flats has been engulfed in flames in Hornchurch
“Local road closures are in place. Motorists and pedestrians are advised to avoid the area.”
Jason Smedley, who works close to the Bridge Point building, said he was in his office when the blast occurred.
The 46-year-old said: “We felt the whole building shake,” and added he could soon see "flames billowing".
A Havering Council spokesman said they were working to ensure the evacuated residents had somewhere to stay.
One social media user, Garry said on Twitter: “Hoping the casualties and nature of injuries in the Hornchurch explosion are minimal.”
The A127 is closed in both directions and motorists and pedestrians are advised to avoid the area.