Among the number of anti-state speeches, Hussain who was living in exile in the UK, had made one in 2016 in which he had urged his followers to take the law into their own hands.
As per the Metropolitan Police, a man aged in his 60s was arrested at an address in north-west London, confirmed as Hussain by the MQM. He was arrested on suspicion of intentionally encouraging or assisting offences contrary to Section 44 of the UK's Serious Crime Act 2007.
The Scotland Yard raided Hussain's London home in the morning and he was taken to a local police station. Fifteen officers took part in the raid, Geo News reported citing security sources.
A forensic unit of Scotland Yard also searched Hussain's residence. The news of his arrest was confirmed by MQM sources, Geo News said.
"The investigation, which is being led by officers from the Met's Counter Terrorism Command, is focused on a speech broadcast in August 2016 by an individual associated with the MQM movement in Pakistan as well as other speeches previously broadcast by the same person," a Metropolitan Police statement said.
"As part of the investigation, officers are carrying out a search at the north west London address. Detectives are also searching a separate commercial address in north west London," the Met Police said.
Hussain was detained under the UK's Police and Criminal Evidence Act (PACE) and taken to a south London police station, where he currently remains in police custody.
The Met Police said that throughout the investigation, officers have been liaising with Pakistani authorities in relation to their ongoing enquiries.
In the 1980s MQM emerged as a largely ethnic party of Pakistan. It has political dominance in southern Sindh province’s Urban areas- notably in Karachi, Hyderabad, Mirpurkhas and Sukkur where a large number of urdu-speaking people who migrated from India during partition reside.
Following Hussain's August 2016 speech, a number of cases were filed against the party chief in Karachi, Quetta and Gilgit-Biltistan region. Anti-terrorism courts hearing these cases have also issued separate non-bailable warrants against the MQM chief.
He is wanted in various cases that include charges of terrorism and incitement to violence.
In October 2016, the Scotland Yard had cleared Altaf in the money laundering case, citing "absence of adequate evidence".
Hussain's UK media office, calling itself the MQM Secretariat, issues regular communique against the Pakistani government.
In its last release on May 15, it pointed to Hussain's social media intervention warning top authorities at the International Monetary Fund (IMF) to be "cautious" before signing any agreement with "unreliable countries like Pakistan".
(With inputs from PTI)