London police have said all 12 people held since the attack late Saturday from the Barking neighborhood, have been freed.
Seven of the arrested were women, aged between 19 to 60, and five were men, aged between 28 and 55 years old. A search was continuing at the address where the man was arrested.
On Tuesday the third attacker was named as Youssef Zaghba, an Italian national of Moroccan descent, who was living in east London.
London's Metropolitan Police have released the names of the perpetrators of Saturday evening's terrorist attack, as polls show the U.K.'s governing party is losing ground in Thursday's general election. And, as NPR's Frank Langfitt reports, that means the issue of security promises to loom large for voters as they decide whether to bolster or erode Prime Minister Theresa May's base of support in Parliament.
"We have always been checking his friendships and verifying that he was not trusting the wrong people, but he had the internet and from there he got everything", Valeria Khadija Collina told L'Espresso in Bologna.
A second source said Italian authorities had flagged him up to British authorities after he moved to England previous year.
Counter-terror agencies are already facing intense scrutiny after it was revealed Butt had been known to security services.
The van-and-knife attack also injured nearly 50 people who were enjoying their Saturday night in a crowded part of London known for its bars and restaurants.
The attack, the third in Britain in three months, has raised questions over the government's ability to protect Britain following cuts to police numbers in recent years. He and Butt lived in Barking in east London. Ireland's national broadcaster RTE reported that Redouane had an Irish residency card and had lived in Dublin.
Rachid Redouane, 30 had claimed to be Moroccan and Libyan.
Much of the area, which had been closed since the attack occurred last Saturday, has now reopened, according to police. Police confirmed that he was known to them and to MI5, the British intelligence service, but said they did not have evidence of a terrorist plot. Meanwhile a chair appears to be thrown in the direction of the terrorist.
The other seven victims killed have been named as: Canadian Christine Archibald, 30, James McMullan, 32, from Hackney, east London, Alexandre Pigeard, 27 and Sebastien Belanger, 36, both from France, Australians Kirsty Boden, 28, and Sara Zelenak, and Spaniard Ignacio Echeverria, 39.
Several people had alerted police to Butt's extremist views and he also appeared a year ago in a documentary, "The Jihadis Next Door", in which he is shown unfurling a black-and-white flag associated with the Islamic State group.