Here's everything we know about the incident:
Police were called and cordons were put in place after a taxi exploded. The male passenger of the car was declared dead at the scene and is yet to be formally identified. The driver, named locally as David Perry, was injured at the scene and remains in hospital in a stable condition.
Where did it happen?
Outside Liverpool Women's Hospital on Crown Street - around a mile away from Liverpool Cathedral where a large Remembrance service was taking place.
What time was the incident?
Was it a terrorist attack?
Counter Terrorism Police North West said three men - aged 29, 26, and 21 - were detained in the Kensington area of the city and arrested under the Terrorism Act in connection with the incident. Security services are assisting police. Another man has been arrested today and searches are ongoing.
What's been said?
A friend of the driver claimed on Facebook he got out of his cab and locked the man in the vehicle after apparently noticing an explosive device.
The city’s mayor Joanne Anderson said: “The taxi driver, in his heroic efforts, has managed to divert what could have been an absolutely awful disaster at the hospital."
Conservative Party chairman Oliver Dowden, when asked about the driver's reported actions, said: "Isn't that the case, the contrast between the cowardice of terrorism attack and the bravery of ordinary Britons up and down the country who put other people's lives before their own. Clearly we'll have to see exactly what happened but if that is the case it is another example of true bravery and courage."
Prime Minister Boris Johnson said: "This is an ongoing investigation so I can't comment on the details or exactly what type of incident it was, what type of crime it may have been.
"But it does look as though the taxi driver in question did behave with incredible presence of mind and bravery.
"But I've got to say this is something that is an ongoing investigation. I think it would be premature to say much more than that."
The Chief Constable of Merseyside Police, Serena Kennedy, said: "While I understand that the incident may cause concern in our communities, it should be pointed out that events of this nature are very rare. Merseyside Police will continue to liaise with community groups, community leaders, partner agencies and individuals in the coming days and weeks to make sure any concerns are addressed and ensuring that we provide the best possible service to local people.
"There will also be an increased and visible police presence on the streets of Merseyside and I would encourage people to engage with my officers and raise any concerns they may have."
Home Secretary Priti Patel said the terror threat level had been raised because there had been two attacks in the space of a month.
Speaking to broadcasters, she said: "The Joint Terrorism Analysis Centre, Jtac, are now increasing the United Kingdom's threat level from substantial to severe.
"And there's a reason for that, and that reason is because what we saw yesterday is the second incident in a month."
Statement from Assistant Chief Constable Russ Jackson, Counter Terrorism North West
"The investigation into the explosion at the Liverpool Women's Hospital, led by Counter Terrorism Policing is continuing at pace.
The circumstances, as we understand them to be, are that yesterday shortly before 11am, a local taxi driver picked up a fare in the Rutland Avenue area of Liverpool.
The fare, a man, had asked to be taken to the Liverpool Women's Hospital which was about 10 minutes away. As the taxi approached the drop off point at the hospital, an explosion occurred from within car, which quickly engulfed it in flames.
Remarkably, the taxi driver, escaped from the cab. He has been treated for the injuries he sustained and has now been released from hospital.
Emergency services quickly attended the scene and Merseyside Fire and Rescue put out the fire following which it quickly became apparent that the passenger remained in the vehicle and was deceased.
Army Ordinance Disposal officers have examined the scene at the Hospital and made the area safe.
Following discussions with Ordinance Disposal Officers, we are able to confirm that this is being treated as the ignition of an explosive device.
Our enquiries also indicate that the device was brought into the cab by the passenger.
We believe we know the identity of the passenger but cannot confirm this at this time.
Our enquiries have led us to two addresses.
The first was Sutcliffe Street in the Kensington area of Liverpool and at this location three men aged 21, 26 and 29 were arrested yesterday under S41 of the Terrorism Act.
A short while ago, again in the Kensington area, a further man aged 20 was arrested under S41 of the Terrorism Act.
They will be interviewed by Counter Terrorism officers later today.
The Sutcliffe Street address was searched overnight and further searches will take place today.
A second address has been searched at Rutland Avenue in Sefton Park.
At this location significant items have been found and further searches will be necessary today and potentially into the coming days.
A cordon is in place at this location and 8 families have been evacuated at this time.
The scene at the Hospital remains in place with specialist examinations ongoing.
It is not clear what the motivation for this incident is.
Our enquiries indicate that an improvised explosive device has been manufactured and our assumption so far is that this was built by the passenger in the taxi.
The reason why he then took it to the Women's Hospital is unknown, as is the reason for its sudden explosion.
We are of course aware that there were remembrance events just a short distance away from the Hospital and that the ignition occurred shortly before 11am.
We cannot at this time draw any connection with this but it is a line of inquiry we are pursuing.
Although, the motivation for this incident is yet to be understood, given all the circumstances, it has been declared a terrorist incident and Counter Terrorism Policing are continuing with the investigation.
Our enquiries will now continue to seek to understand how the device was built, the motivation for the incident and to understand if anyone else was involved in it.
We understand that this news will be of concern to the people of Liverpool and Merseyside and the rest of the UK, but it is a reminder that the threat from terrorism remains significant.
Police, with all our partners, will continue to work hard to protect the UK and keep the public safe, but countering terrorism also requires support from all corners of our society.
We have said for many years that Communities Defeat Terrorism, and the help and support we get from the public is a vital part of that. So we would urge everyone to remain vigilant, and if you do see anything suspicious then please report it, in confidence, to police via the Anti-terrorist hotline or gov.uk/ACT. It won't ruin lives, but it may well save them.
Anyone who has any information should call on 0161 856 1027 quoting Liverpool Womens Hospital incident.
Details can be passed to the independent charity Crimestoppers anonymously on 0800 555 111."
What's the latest news:
- The PM will hold a COBRA meeting this afternoon to discuss the terror incident.
- Police have now officially declared the incident a terror attack.
- The UK terror threat level has been raised to severe, meaning an attack is 'highly likely', following the Liverpool explosion.
- The taxi driver hurt in the Liverpool terror attack has been released from hospital.
- Counter Terrorism Detectives leading the investigation into the explosion have confirmed the name of the person they believe to have died - 32 year old Emad Al Swealmeen.
- Police say Liverpool bomber began making 'relevant purchases' for attack in April.