Undercover police along with uniformed officers were patrolling the West End as they were drawn by CCTV to a group of males outside of The Hippodrome casino in Leicester Square last week.
The group were seen to approach members of the public and are believed to have shortly conducted a drug deal exchange, the Metropolitan Police said.
CCTV showed a potential buyer walking away onto Charring Cross Road.
In response, officers detained and searched the buyer, as they arrested them when finding Class A drugs.
Officers then went on to detain the group of suspected dealers, but two of them ran away.
One of them ran towards Leicester Square and he was swiftly detained with a knife found in his waistband.
He was arrested on suspicion of multiple offences including drug dealing and possession of a knife.
The second person was also caught and during the search officers found a large quantity of cash.
He was arrested on suspicion of being concerned in the supply of Class A drugs.
Two of the other males, who did not run, were also detained and were found with drugs and cash.
Both were arrested on suspicion of being concerned in the supply of Class A drugs.
