Police say at least four people were killed, including the attacker and a police officer, and 20 people were injured.
At a news conference, Scotland Yard's top anti-terror officer Mark Rowley said the two were held in the West Midlands and North West.
"There might be people out there who did have concerns about Masood but did not feel comfortable for whatever reason in passing those concerns to us".
Authorities identified him moments after Parliament held a moment of silence and reconvened less than 24 hours after the attack, which forced a lockdown of the United Kingdom government's seat of power.
The Islamic State extremist group has claimed that Masood was one of its "soldiers".
Not a great deal is known about Masood, who was shot dead by a police firearms officer after he rammed a auto into pedestrians on Westminster Bridge and stabbed an unarmed police officer outside parliament. He was then shot dead by other officers.
- A 75-year-old man who had been receiving medical treatment following the attack had life support withdrawn on Thursday evening.
Junior doctor Colleen Anderson from St Thomas' Hospital confirmed the death of the woman and said a number of other people were hurt - some with "catastrophic" injuries.
France has kept thousands of military troops deployed around its interior since the November 2015 Paris terrorist attacks in which Islamic State loyalists killed 130 people.
The sitting in the House of Commons was suspended while police officers sealed off the area around the incident. The first reports came in from political reporters barred from leaving the premises.
Officials also confirmed that a woman was rescued from the River Thames after she apparently jumped from Westminster Bridge to escape the assailants' auto.
He crashed into the fence of the Palace of Westminster before running through the gates of Parliament and repeatedly stabbing PC Palmer.
But it remains unclear if members of ISIS played a direct role in the London attacker's plot, or if he was inspired by the group's propaganda.
Nigel Farage, former leader of the right-wing U.K. Independence Party, blamed the attack on "multiculturalism".
While at present it is unclear exactly what happened, a London-based journalist said shots were fired and that journalists were confined to the press gallery in the parliamentary building.
Police said he went by numerous aliases, including, reportedly, Adrian Elms, while reports suggest he lived all over England, including in Luton and east London. Another 29 people were being treated in hospital for their injuries - seven of them were critically wounded.
Elsewhere yesterday, hundreds of police swooped in dramatic raids across the nation making eight arrests. These streets of Westminster, home to the world's oldest parliament are ingrained with a spirit of freedom. They are now trying to ascertain whether Masood had acted alone.
Prime Minister Theresa May has said that Masood was known to intelligence services as a "peripheral" figure some years ago but there was no warning of his intention to mount an attack. It said on its Amaq website the attacker "carried out the operation in response to calls for targeting citizens of the coalition" of countries fighting ISIL in Syria and Iraq.
The Sun said Masood stayed in the Preston Park Hotel on the outskirts of Brighton on the night before the attack.
Thanks to Facebook's Safety Check tool, most of our friends and family who live or work in London were quickly accounted for - they were able to click a box to let us know they were safe, and I was able to assure my daughter right away.