The van-and-knife attack also injured nearly 50 people who were enjoying their Saturday night in a crowded part of London known for its bars and restaurants.
Scotland Yard's counterterrorism chief, Mark Rowley, said Butt was investigated by officers in 2015 but they found no evidence he was planning an attack and he was "prioritized in the lower echelons of our investigative work".
Eight people died and 48 were injured after three terrorist went on a van and knife rampage in London Bridge on Saturday night, June 4. Both men lived in the Barking area of east London.
So far, 21 people have been arrested as part of that investigation and 12 of them have been released without charge.
He added: "There was a male arrested, but I don't know who that was".
"Our work necessarily involves making hard judgements about how to prioritise the resources available to us at a time when the United Kingdom is facing a severe and high tempo terrorist threat", police said.
Police said yesterday that "a number" of other people have been detained, but no details were provided.
Counter-terror agencies were already under intense scrutiny after it was revealed Khuram Shazad Butt, 27, and Rachid Redouane, 30, were also known to security services.
In Manchester, police arrested two 20-year-old men on Wednesday in connection with last month's suicide bombing that killed 22 children and adults attending a concert by Ariana Grande, police said.
Rome: A third man arrested for carrying out Saturday's deadly attack in central London is an Italian-Moroccan who was arrested previous year on suspicion of trying to reach Syria, according to Italian media reports.
In particular, the revelation that at least one of the attackers, Khuram Butt, was known to security services has raised concerns that they lack the resources to prevent attacks.