The arrests in Barking, east London, followed a raid at a flat belonging to one of the three attackers.
A van hit pedestrians on London Bridge at 21:58 BST on Saturday. Three men then got out and stabbed people in nearby Borough Market.
The attackers were shot dead by eight officers who fired 50 bullets. A member of the public was accidentally shot.
Of the 12 people who were arrested, seven are women. A 55-year-old man was later released without charge.
Meanwhile, Canadian national Chrissy Archibald has been named by Canadian broadcaster CTV as the first victim of the attack.
A statement from her family said she "believed strongly that every person was to be valued and respected".
It said she had worked in a homeless shelter until she moved to Europe to be with her fiance.
'Range of injuries'
The so-called Islamic State group has claimed responsibility for the attack.Assistant Commissioner Mark Rowley said the police had reacted knowing the attackers "had to be stopped immediately".
"The situation these officers were confronted with was critical, a matter of life and death - three armed men wearing what appeared to be suicide belts," he said.
The vests were later found to be hoaxes.
Mr Rowley said 36 people were in hospital with a "range of injuries" and 21 were in a critical condition.
Malik Ramadhan, a doctor at the Royal London Hospital, said his team had treated one man who had been shot in the head and was expected to make a full recovery.
Both London Bridge rail and Tube stations are due to reopen on Monday from 05:00 BST but the rail station will be exit only, Network Rail said.
The mother of 23-year-old Daniel O'Neill, who is recovering in hospital after being stabbed, told the BBC he had a seven-inch scar from the knife attack.
"He had just stepped outside the bar for a second and a man ran up to him and said 'this is for my family, this is for Islam' and stuck a knife in him," Elisabeth O'Neill said.
"I'm still in shock. I can't quite believe it's happened."
Sunday Express journalist and martial arts expert, Geoff Ho, who was injured, said that he helped defend a bouncer from the attackers outside the Southwark Tavern as it "isn't happening on my watch", his newspaper reported.
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According to neighbours, the dead attacker lived there for about three years and was married with two children.
One man, who did not want to be named, told the BBC's Asian Network that one of the attackers had become more extreme over the past two years.
"We spoke about a particular attack that happened and like most radicals he had a justification for anything - everything and anything.
"And that day I realised that I need to contact the authorities," he said.
He said no action was taken.
"I did my bit... but the authorities didn't do their bit," he said.
It is the third terror attack in the UK in three months, following the car and knife attack in Westminster in March, in which five people were killed, and the Manchester bombing less than two weeks ago, in which 22 people were killed.
Most political parties have suspended national general election campaigning, but the prime minister said full campaigning would resume on Monday.
The general election will go ahead as planned on Thursday.
Condemning the attack, Theresa May said it was "time to say enough is enough".
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The white Renault van used was recently hired by one of the attackers, Mr Rowley said.
Four police officers who tried to stop the attack were among those injured, two of them seriously.
One of them was an off-duty officer and amateur rugby player who tackled one of the terrorists, suffering stab wounds.
Another, a British Transport Police officer who joined the force less than two years ago, took on the attackers armed with only his baton.
Metropolitan Police Commissioner Cressida Dick praised their "extraordinary bravery".
The three suspects were shot dead within eight minutes of the first 999 call being received.
Among the other developments:
- Prime Minister Theresa May made a private visit to King's College Hospital in south London to visit some of the injured
- There will be a minute's silence on Tuesday at 11:00 BST in remembrance of those who lost their lives and all others affected by the attacks
- Two Australian citizens "have been directly impacted" said the country's Prime Minister Malcolm Turnbull
- A French national was killed and seven others wounded, including four with serious injuries according to foreign minister Jean-Yves Le Drian. One French national is still missing
- The Met Police has set up a casualty bureau on 0800 096 1233 and 020 7158 0197 for people concerned about friends or relatives.
- BBC reporter Holly Jones, who was on the bridge, said the van was
"probably travelling at about 50 miles an hour" and hit "five or six
people".
According to another witness, Eric, the men inside jumped out once the van crashed and "ran towards the people that they nearly ran over".
"[Then] they literally just started kicking them, punching them, they took out knives... it was a rampage really," he said.
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"I stood up to take a look and then all of a sudden there were gunshots. Lots of people were screaming."
#SofaforLondon
Hundreds of people were stranded after being unable to return to their homes and hotels.As with the Manchester attack, there were stories of Londoners coming to each other's aid, offering free taxi rides, free accommodation or just the opportunity to call friends and family - many using the hashtag on social media #sofaforLondon.
- Speaking in Downing Street after a meeting of the government's
emergency Cobra committee, the prime minister said the country "cannot
and must not pretend that things can continue as they are".
Mrs May said there was "too much tolerance of extremism in our country" and while it would involve "some difficult and embarrassing conversations", that must change.
In a speech, Labour leader Jeremy Corbyn backed the police to use "whatever force is necessary" to save lives.
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