Police were called to reports of an explosion at the venue at about 22:35 BST following a pop concert by the USA singer Ariana Grande.
Witnesses said a loud explosion was followed by screams, panic and a stamped of people trying to leave the crowded building, which is one of the largest indoor arenas in the world.
It may not have been at the level of complexity seen in Paris in 2015, when multiple attackers sent from Syria used guns and suicide belts, but it will still have required planning to make an improvised explosive device.
More than 400 police have been deployed throughout Manchester, said Hopkins, the chief constable.
Officials say children are among the victims. The singer was not injured, according to a representative.
Grande posted a brief message on social media following the incident: "broken. from the bottom of my heart, i am so so sorry. i don't have words".
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"In the absence of conclusive evidence, the choice of venue, the timing and the mode of attack all suggest this was terrorism", said a US counter terrorism official who also spoke on condition of anonymity.
"We are working closely with the National Counter Terrorism Policing Network and U.K. Intelligence partners".
"A huge bomb-like bang went off that hugely panicked everyone and we were all trying to flee the arena", said Majid Khan, 22, who was at the show with his sister.
Video from inside the arena showed concertgoers screaming as they made their way out amid a sea of pink balloons.
Following the attack, British Prime Minister Theresa May has suspended her general election campaign.
"I extend my deepest condolences to those so terribly injured in this terrorist attack and to the many killed and the families, so many families, of the victims".
The British government is planning an emergency Cabinet meeting for later Tuesday morning.
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The leaders are expected to discuss resuming long-stalled Israeli-Palestinian negotiations. "They were all saying I did". President Rivlin thanked Trump for his "commitment to Israel's ability to face the threats of today and of tomorrow".
If the incident is confirmed as a terrorist attack it would be the most deadly in Britain since the London subway bombings in 2005.
Service at the Manchester Victoria train station, which is located under the arena, had been canceled, officials said. James said he believed he heard a second explosion as they were running out.
The Dangerous Woman tour is the third concert tour by 23-year-old Grande and supports her album of the same name.
Hollie wrote on Facebook: "Maddison just wasn't herself at the concert, usually I would have persuaded her to stay because of the amount of money it cost, but to be honest I just wasn't feeling it".
The tour began in Phoenix, Arizona, in February.
The explosion rocked the Manchester Arena at around 10:30 p.m. (5:30 pm ET) as Grande fans, many of them young teenagers and children, left the venue.
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