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The British intelligence has identified 23,000 jihadist extremists living in the country as potential terrorist attackers, media reports said on Saturday.

The scale of the challenge facing police and security services was disclosed by sources in Whitehall after criticism that multiple opportunities to stop Monday's suicide bombing attack on the Manchester Arena had been missed, The Times said.

About 3,000 people from the total group of 23,000 are judged to pose a threat, the British daily said.

That group is under investigation or active monitoring in 500 operations conducted by police and intelligence services, the newspaper said, adding that the rest have featured in previous inquiries and are categorized as posing a "residual risk."

The two terrorists who have struck in Britain this year -- Manchester bomber Salman Abedi and Westminster attacker Khalid Masood who killed five people two months ago -- were in the pool of the so-called former subjects of interest and no longer under any surveillance, it added.

Prime Minister Theresa May downgraded the terror threat in Britain from "critical" to "severe" on Saturday morning, but said troops will remain deployed on the streets until Monday.

Britain's top police officer for counter-terrorism said 11 men were being held by police with more arrests expected.

London Metropolitan Police Assistant Commissioner Mark Rowley said significant arrests meant a large part of the terror network around suicide bomber Abedi had been wound up.

In an update from the Metropolitan Police Service on Saturday afternoon, Rowley confirmed the threat level had been reduced to the next level down.

"The high pace and rapid progress of this investigation is continuing. There were three more arrests overnight and we now have 11 men in custody. There are now 17 searches either concluded or continuing at various addresses largely in the northwest of the country and we are getting a greater understanding of the preparation of the bomb," he said.

"There is still much more to do. There will be more arrests and there will be more searches but this greater clarity and this progress has led the independent body that assess threat levels to come to the judgement that an attack is no longer imminent," he added.

"Once we get past the weekend, we will be looking to step down the extra resources we have had in place over the last week. And the military support we have had in place over the past few days, under Operation Temperer will start to phase out as well. There are detailed plans in place to ensure military personnel will remain at readiness to deploy in support of the police should future security situations require," said Rowley.