A Libyan man has been arrested on suspicion of conspiracy to murder PC Yvonne Fletcher three decades ago.
PC Fletcher, 25, died after being shot while policing a demonstration outside the Libyan Embassy in London in 1984.
Scotland Yard described the arrest of the man, in his 50s, as a “significant development”.
He was detained on Thursday morning in south-east England and is in custody. He was also held on suspicion of money laundering.
Two other Libyan nationals – a woman in her 40s and a man in his 30s – were also arrested on suspicion of money laundering at separate addresses in London and south-east England.
They were later released on bail pending further enquiries, Scotland Yard said.
PC Fletcher’s family said in a statement that her father Tim had recently died, with his “one regret in life” being that he had “never witnessed any justice”.
The Met is offering a reward of up to £50,000 for information.
PC Fletcher was one of 50 officers policing a protest against Col Muammar Gaddafi’s regime outside the embassy when she was hit by a burst of gunfire from a first-floor window.
The death of Gaddafi in 2011 and the subsequent regime change provided new lines of enquiry, with police visits to Libya since then unearthing “new and fresh evidence”.
The force has released images of 14 people they want to trace from a pro-Gaddafi group, which was holding a counter-demonstration nearby.
Video footage of the demonstration and shooting has also been released.
The 54-second clip shows the chaotic moments after shots were fired, with dozens of demonstrators falling to the ground after a loud bang is heard.
Commander Richard Walton, head of counter-terrorism at Scotland Yard, said: “The day Yvonne was shot remains one of the saddest and darkest days in the history of British policing.
“We have never lost our resolve to solve this case and to bring to justice those who conspired to commit this act of murder.”
He said a number of shots were fired at 10:17 on the morning of 17 April, 1984, hitting PC Fletcher in the back. Ten anti-Gaddafi campaigners were also injured in the shooting.
Mr Walton said a pistol and an automatic weapon are thought to have been used. Police believe the shooting was part of the “stray dogs campaign” arranged from Libya to attack overseas dissidents.
PC Fletcher’s family said: “Recently we have had to come to terms with another loss through the death of Yvonne’s father, Tim.
“His one regret in life was that no one had been arrested… [he] never witnessed any justice.
“Resolving this crime is still important to all the family.
“Any information, however small, can help bring closure for the family and we therefore continue to support the Metropolitan Police in their ongoing investigation.”
Mr Walton appealed for anyone in the area of the embassy, in St James’s Square, on the day of the shooting to contact police – even if they had already done so in the past.
He said: “In particular, we want to speak to those who attended the Libyan People’s Bureau on the day… to protest, either against or in favour of Gaddafi.
“There were a number of witnesses who were part of the pro-Gaddafi counter-demonstration, orchestrated from within the Libyan People’s Bureau, whom we have never spoken to.
“We appeal particularly to these people to come forward and speak to us now, even after 31 years.”
The shooting of PC Fletcher sparked an 11-day siege of the Libyan embassy.
Because of diplomatic immunity, the Met could not search the bags of the diplomats and staff who were subsequently deported.
Diplomatic ties between Libya and the UK were severed following the killing.