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A car has deliberately ploughed into pedestrians in a suspected terror attack in Harajuku, Tokyo on New Year's Day.

The incident took place as people gathered to celebrate New Year's Eve in downtown Tokyo.

A man in his 20s was taken into custody and police said he is suspected of intentionally trying to kill people by driving the car through the street.

The driver has since told police that he "intended it to be a terror attack," according to local media reports.

Eight people were injured, including a man in his teens.

(Image: REUTERS)

The 20-year-old man driving the car allegedly told police: "I raised a terror attack".

Footage from local broadcaster NHK showed a small van with the entire front end smashed and officers and ambulance workers rushing to the scene.

The crash happened early on Tuesday local time on Takeshita Dori.

The street is well-known to tourists as well as pop culture and fashion fans and runs next to the Meiji Shrine in Harajuku.

News reports say the car had been rented and the driver fled the scene but was arrested 20 minutes later.

(Image: REUTERS)

Pictures show a police cordon in place with forensic tents surrounding the car.

An eyewitness said: "There are many police officers in place...running around to prevent entry."

She said that she and three girls with her saw what happened and gave statements to police.