Anti-terrorist police were today still questioning a man after a live grenade in a suitcase sparked a major terror alert at Gatwick.

Two thousand people had to leave the north terminal in yesterday's evacuation and some 150 spent the night wrapped in blankets at the airport.

The 37-year-old man who was arrested is understood to have boarded a British Airways flight from Bogota, Columbia, in Caracas, Venezuela, just after 2pm.

He was taken to Paddington Green police station, London, and was being questioned by Scotland Yard detectives today.

Many flights were cancelled and passengers had to be rebooked on flights today.

Some spent the night in the nearby Le Meridian hotel - many on sofas in the lobby and guest areas - while others had to find a space on the airport floor.

The chaos stretched late into the night, with more than 100 departures cancelled.

Terminal manager Christine Gover said: "Gatwick Airport handed over blankets and drinks to people overnight. We estimated there are about 150 people that spent the night in the terminal.

"There are queues for people to get tickets for flights today and there are also queues because we already had a busy day ahead and with yesterday's passengers all the flights are full this morning.

"We are actually back to normal. In terms of clearing the backlog of people, I envisaged that could go on for most of the morning."

A BA spokeswoman said ten inbound flights and one outbound one had been questioned toay. About 4,000 BA passengers had been affected by the alert.

While the Home Office was keen to stress no link had been made between the grenade find and the perceived terrorist threat to Britain, Home Secretary David Blunkett said the drama at Gatwick, and the unrelated arrests of two men at Heathrow, proved the country was now living under a genuine threat.

Hours earlier, shadow home secretary Francis Maude, Tory MP for Horsham, had questioned in Parliament whether Gatwick was being left vulnerable to terrorists as security was tightened at other airports across Britain.

The grenade is believed to have been in the man's aircraft hold luggage, not his hand luggage, although this has yet to be officially confirmed.

A BA spokesman said an investigation had begun as to how the grenade made it on to the plane undetected.

The first travellers waiting in the north terminal knew of the drama was when they were shepherded outside by police and BAA security staff.

A wave of panic engulfed the crowd. Mothers with push-chairs and people weighed down with suitcases jostled to get outside.

Many were directed to Le Meridien, where staff accommodated about 500 evacuees.

There was further drama at 5.45pm when a suspect package was discovered in the packed hotel lobby, which was swiftly cordoned off.

After an examination it turned out to be a false alarm.

Gatwick's south terminal remained open.

At 6.15pm, Roger Cato, managing director of Gatwick, held an impromptu Press conference outside the north terminal.

He said: "There was considerable inconvenience to departing passengers and more than 100 flights were cancelled."

Kim Fowle, who works at the Sunglass Hut in the north terminal, said: "A manager told me police had found a live hand grenade but nobody knew for sure what had happened. The police just started moving people out of the terminal and there was a bit of a panic."

Her friend Fiona Ritchie said: "We saw women with push-chairs and their husbands pushing trolleys, running as fast as they could."

Hundreds of people congregated on roadways and ramps outside the terminal building.

A stranded American traveller described the chaos as worried crowds were rushed out by airport staff.

Jim Miller, 46, arrived at 7am on a flight from Atlanta, USA, and was due to catch a shuttle to Heathrow for a connecting flight to Nairobi. He had hired a room at Le Meridien for the day.

When he came downstairs to board the shuttle he found hundreds of people herded into the hotel lobby.

Simon Cook, general manager of Le Meridien, said his staff had opened every available area to accommodate the evacuees.

The 500-room hotel was already fully booked before the evacuation and Mr Cook estimated it had taken in another 300 to 400 passengers.

He said: "Following the incident, we were asked to assist and provide emergency accommodation and space for the passengers. I wasn't aware it could be all night."

Barely hours before the security alert, Mr Maude had said in Westminster he was worried the extra security at Heathrow could divert terrorists to other airports.

He demanded assurances from Mr Blunkett that safety would be beefed up at Gatwick and other airports.

Crawley Labour MP Laura Moffat also challenged the Home Secretary to reveal what was being done at Gatwick.

But in angry exchanges, Mr Blunkett refused to reveal security levels. He said it was important terrorists did not get the impression Gatwick was a "softer target".