Counter-terrorism police have raided a house in Manchester after three people including a British Transport Police officer were stabbed in a “frenzied attack” during New Year’s Eve celebrations.

The incident, classified as critical, was being investigated by counter-terrorism police officers after the perpetrator was allegedly heard shouting Islamist slogans during the attack just before 9pm at Victoria station in the city. A 25-year-old man was arrested on suspicion of attempted murder and remains in custody.

On Tuesday, officers confirmed they were searching a property in the Cheetham Hill area of the city where the attacker is believed to have lived.

Russ Jackson, an assistant chief constable with Greater Manchester police (GMP), described the attack on the officer and a couple in their 50s as “frenzied” and “random in nature”. It took place near the scene of the 2017 Manchester Arena bombing.

Jackson said there was “nothing to suggest others were involved” and that officers were keeping an “open mind” and taking into consideration the attacker’s mental health.

On Tuesday morning forensic officers were seen scouring the station and police were examining CCTV footage. Security officials in government, police and the intelligence services were helping the investigation.

The British Transport Police officer was stabbed in the shoulder, while the man and woman both sustained abdominal injuries, and the woman also received wounds to her forehead.

Facebook Twitter Pinterest The alleged victims of the knife attack in Manchester on New Year’s Eve. Photograph: Sam Clack/Ian Leonard

Jackson said the couple, who were in the city celebrating the new year, could be in hospital for some time after sustaining “significant injuries” during the attack. The officer, a sergeant in his 30s, had been discharged.

Police said they had spoken to a number of witnesses and urged anyone with photographs or video footage of the incident to get in touch.

During a press conference, the GMP chief constable, Ian Hopkins, said: “Last night we experienced an horrific attack on people out to simply enjoy the New Year’s Eve celebrations in Manchester. My thoughts are with the couple who are still being treated in hospital for their serious injuries and with the brave British Transport Police officer who was also stabbed during the attack.

“I know that the events last night will have affected many people and caused concern. That the incident happened so close to the scene of the terrorist attack on 22 May 2017 makes it even more dreadful.”

Hopkins confirmed the incident was being treated as a “terrorist investigation” and that officers had been working “throughout the night to piece together the details of what happened”, and to identify the man who was arrested.

Facebook Twitter Pinterest Police outside Victoria station in Manchester on New Year’s Eve. Photograph: Pat Hurst/PA

Sean O’Callaghan, an assistant chief constable at British Transport Police, said: “I am incredibly proud of the four officers who were immediately on scene last night, detaining a man who was wielding a knife. They were fearless, running towards danger and preventing further harm coming to passengers.

“Unfortunately, however, one of our police officers suffered a stab injury to their shoulder and we’re all relieved that this is not more serious. It is good news that he has now been discharged from hospital, we are all wishing him a speedy recovery.”

The prime minister, Theresa May, praised the emergency services for their handling of the incident. “My thoughts are with those who were injured in the suspected terrorist attack in Manchester last night,” she said. “I thank the emergency services for their courageous response.”

The Labour leader, Jeremy Corbyn, said he was “thinking of those injured in Manchester last night, their families and loved ones. Thanks to our emergency services for their professionalism and bravery in dealing with this suspected terror attack.”

Police said the incident was one of several “serious crime incidents” in the city centre overnight, with 15 arrests being made and a total of 120 incidents recorded since 7pm on Monday. They said in a tweet just after 6am on Tuesday that officers had “done a great job of looking after people in the city”.

GMP City Centre (@GMPCityCentre) Coming twds the end of #OpCustodian night shift-officers have done a great job of looking after people in the City. As well as the critical incident at Victoria Station we've had a number of serious crime incidents, 15 arrests & 120 incidents reported to us since 7pm. Insp M

The former chief constable of GMP Sir Peter Fahy commended the courage of the officers who dealt with the station incident. “It would certainly appear police officers showed incredible bravery in tackling the attacker at Manchester’s Victoria station last night, saving lives,” he said.

GMP said a large police presence would remain in place at the station but this was “not as a result of any increased threat. Please follow directions from officers on the ground and speak to them if you have any concerns.”

Sam Clack, a BBC producer, was waiting for a tram when the attack took place, said: “I just heard this most blood-curdling scream and looked down the platform. What it looked like was a guy in his 60s with a woman of similar age and another guy all dressed in black.

“It looked like they were having a fight, but she was screaming in this blood-curdling way. I saw police in hi-vis come towards him. He came towards me. I looked down and saw he had a kitchen knife with a black handle with a good 12-inch blade. It was just fear, pure fear.”

Clack claimed he heard the man shouting “Allah” during the attack. “He shouted it before, he shouted it during it – Allah. The guy, his exact words were, he said: ‘As long as you keep bombing other countries, this sort of shit is going to keep happening.’”

Facebook Twitter Pinterest Police restraining a man after three people were stabbed at Victoria Station in Manchester. Photograph: Sam Clack/PA

He said police used a stun gun and pepper spray on the man before several officers jumped on him. “It was scary. I have never been so scared in my life. Someone with a knife six to eight feet away, he had just stabbed someone. It was the proximity. It just highlights the fact that it can happen anywhere.”

The North West ambulance service said it sent three vehicles to the incident and took all three victims to hospital for treatment. While the station was closed after the attack, the city’s fireworks display in Albert Square went ahead after security was increased.

There have been no major terrorist attacks in the UK for the past year but MI5 and the police say they are dealing with 700 investigations into suspected terrorism. In 2017, there were five terrorist attacks – four in London and one in Manchester.

The terrorism threat level for the UK remains at severe, meaning an attack is deemed to be highly likely.