The Australian government's travel advice for Britain will be changed after British Prime Minister Theresa May upgraded the terrorism threat from "severe" to "critical", meaning another attack may be imminent.
Foreign Affairs Minister Julie Bishop also said there was still no suggestion that any Australians were caught up in the Manchester bombing, which has claimed 22 lives.
After a meeting of the Australian government's high-level National Security Committee, the domestic threat level will remain at "probable", where it has been since late 2014.
"We would recommend that anyone seeking to travel to the United Kingdom read our travel advice, which is under constant review and brings the latest information that we have to the Australian public," Ms Bishop told Nine's Today show.
"Obviously with the threat assessment being raised that will change our assessment of travel to the United Kingdom."
Australians have been urged not to travel to Manchester for the time being.
British authorities are investigating whether the suicide bomber, named as 22-year-old Salman Abedi, was working alone or as part of a network.
A 23-year-old man, believed to be the alleged attacker's brother, has been arrested.
Mrs May has announced that the country's armed forces will be deployed to work with police to help secure key sites and other public events.
Following discussions with the Australian high commissioner to Britain, Alexander Downer, and the British authorities, Ms Bishop said there was still no evidence any Australians were involved.
"But I must point out that the grisly task of identifying bodies continues and we are in touch with all the major hospitals in Manchester," she said.
The bomb went off at about 10.30pm Monday in the Manchester Arena foyer, just after the end of Grande's concert.
There was a blast and a flash of fire, an eyewitness said, followed by smoke and shattering glass.
A parent there waiting to pick up his daughter said he was thrown across the room and through some doors by the blast. When he stood up he was surrounded by prone, possibly dead bodies, he told the BBC. He saw children lying among them.
Paramedics said later they were treating "shrapnel-like" injuries.
The next morning counter-terrorism police gathered in London and Manchester.
British Prime Minister Theresa May summoned security and intelligence agencies to an emergency meeting of the government's Cobra crisis committee.
In a statement Mrs May said all her thoughts were with the victims and their families.
Mrs May said: "We are working to establish the full details of what is being treated by the police as an appalling terrorist attack".
Home Secretary Amber Rudd said it was a "barbaric attack deliberately targeting some of the most vulnerable in our society – young people and children out at a pop concert".
"Its intention was to sow fear, its intention is to divide, but it will not succeed".
Police began scanning through the hundreds of CCTV cameras in the area, to piece together the cause of the explosion and identify the attacker. They also appealed for concertgoers to upload images and video
The explosion happened with most concertgoers still inside the venue, when the lights had come up after the American singer had left the stage.
It "rocked the building", eyewitness Andy Holey told the BBC.
The crowd of about 18,000 still in the arena panicked, running away from the blast.
"All I could hear was people screaming, people crying," a young woman told the BBC. She said she saw people lose their phones, even their shoes in the desperate crush for the exits.
"We were making our way out and when we were right by the door there was a massive explosion and everybody was screaming," Catherine Macfarlane told Reuters.
"It was a huge explosion - you could feel it in your chest. It was chaotic. Everybody was running and screaming and just trying to get out of the area."
Outside, emergency services arrived quickly. Armed police and more than 50 ambulances surrounded the arena.
There was chaos outside, as distraught parents and children tried to find each other.
The local community immediately rallied, with locals flocking to the arena bringing food and offering help, even opening their homes to those left in the cold after the blast.
Manchester's central Victoria train station, which is next to the arena, was closed and all trains cancelled.
Chief Constable Ian Hopkins asked media not to speculate on the identity of the attacker as their investigation continued.
More than 400 officers have been deployed into the investigation and onto the streets of the city, large parts of which were in lockdown on Tuesday morning.
He asked the public to remain alert and report any suspicious activity. Manchester had a "long history of the community standing together" in the face of attacks, he said.
"This is a sad day," he added.
Grande, 23, tweeted she was "broken. from the bottom of my heart, i am so so sorry. i don't have words".
London Mayor Sadiq Khan said there would be more police on the streets of London on Tuesday. Grande's tour was scheduled to continue on Thursday at the O2 arena in London.
A spokesperson for Australia's Department of Foreign Affairs and Trade said it was not known if any Australians were involved.
"The Australian High Commission in London is making urgent enquiries to determine whether any Australians have been affected by the incident," it said.
All major UK political parties suspended their election campaigns for the day.
Leaders from around the world sent messages of sympathy and support.
In a statement to the Australian Parliament, Prime Minister Malcolm Turnbull said it had been a vile and "brutal attack on young people everywhere".
Australia was acting to protect places of mass gathering, he said, and Australia stood with the UK as "steadfast allies in freedom's cause".
