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Twenty-two people have been killed and 59 injured in what Theresa May called an "appalling, sickening, terrorist attack" at Manchester Arena.
A lone male suicide attacker set off a homemade bomb in the foyer at 22:33 BST on Monday at the end of a concert by US singer Ariana Grande.
Armed police have arrested a 23-year-old man in Chorlton, south Manchester, in connection with the attack.
The first victim has been named as 18-year-old student Georgina Callander.
She was studying health and social care at Runshaw College in Lancashire.
Relatives are using social media to hunt for loved ones, and an emergency number, 0161 856 9400, has been set up.
In a statement in Downing Street, the prime minister said it was "now beyond doubt that the people of Manchester and of this country have fallen victim to a callous terrorist attack" that targeted "defenceless young people".
She said the security services believe they know the attacker's identity but are not yet able to confirm it.
Mrs May has chaired a meeting of the government's emergency Cobra committee and is expected to travel to Manchester later.
It is the worst terrorist attack in the UK since the 7 July bombings in 2005 in which 52 people were killed.
Sixty ambulances went to Manchester Arena after the attack and those wounded are being treated at eight hospitals around the city.
Greater Manchester Police Chief Constable Ian Hopkins said it was "the most horrific incident" the city had ever faced, and the "fast-moving investigation" was now working to establish whether the attacker "was acting alone or as part of a network".
The Arndale shopping centre in Manchester was briefly evacuated on Tuesday, but is now reopening.
Eyewitnesses at the Arena described seeing metal nuts and bolts among the debris, and spoke about the fear and confusion that gripped the concertgoers.
Andy Holey, who had gone to the arena to pick up his wife and daughter, said: "An explosion went off and it threw me about 30ft from one set of doors to the other set of doors.
"When I got up I saw bodies lying on the ground. My first thought was to go into the arena to try to find my family."
Emma Johnson said she and her husband were at the arena to pick up her children, aged 15 and 17.
"We were stood at the top of the stairs and the glass exploded - it was near to where they were selling the merchandise," she told BBC Radio Manchester.
"The whole building shook. There was a blast and then a flash of fire afterwards. There were bodies everywhere
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