Semtex explosives, the same kind favoured by terrorists such as the IRA, were reportedly found in the woman's car.
The 40-year-old dog-handler was held after her vehicle was searched, but police said the incident was not thought to be terror-related.
Police swooped on her car outside the Olympics stadium in Stratford, East London, after being tipped off by a source close to the stadium.
The woman, employed by a private security firm, was arrested for possessing explosives and class A drugs . She is alleged to have said that the substances were used for training dogs.
Officials stressed the safety of the stadium was never at risk.
A Scotland Yard spokesman said: ‘On March 29, acting on information received, police stopped and searched a woman in a car park off Pudding Mill Lane.
‘Her vehicle was searched and a 40-year-old woman arrested on suspicion of possession of an explosive substance and Class A drugs.
‘She is in custody at an east London police station. Read More