They also confirmed a number of pedestrains had been injured, and the male driver had been detained at the scene.
"Officers remain at the scene and cordons are in place to assist the investigation. We will issue further info when we have it", police said.
Prime Minister Theresa May said: "My thoughts are with those injured in the incident in Westminster and my thanks to the emergency services for their immediate and courageous response".
Police went on to say that at number of pedestrians were hurt in the incident, but it's not believed their injuries were life-threatening.
"We're still trying to piece it together", a spokesman said.
Images posted to social media showed a man in handcuffs being led away from the auto by officers.
She added that the person driving remained in the vehicle after the accident. "There was a loud bang", he said.
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However, CNN itself was reporting the incident as a terrorist attack before Trump tweeted.
"I was told to move and started to run", he said.It (the car) was behind me.
"I have seen people on the ground, lying on the road. I've seen people, about 10, on the road, lying down, but I haven't seen any fatalities", Williams said. "I heard some noise and someone screamed", she said.
"I saw smoke coming out of the vehicle".
Armed police swooped into the area after the incident was reported at 7:37 a.m., arresting the auto driver and cordoning off streets surrounding the heart of Britain's government. No one was being allowed entry into the Parliament. The buildings would be largely empty as Members of Parliament are on their summer break.
Witness Ewalina Ochab told the Press Association that the incident "looked intentional".
The police said that CCTV footage showed the vehicle driving towards pedestrians before the crash, which was a factor in their decision to treat this as terrorism, CNN reported. He was shot dead at the scene.
It was the first of five attacks on Britain a year ago that police blamed on terrorism.