The UK terror threat level is being raised from "substantial" to "severe", Home Secretary Alan Johnson has said.
The new alert level means a terrorist attack is considered "highly likely". It had stood at substantial since July.
It is in response to the perceived increased threat from international terrorism following the failed Detroit airliner bombing on Christmas Day.
Mr Johnson stressed there was no intelligence to suggest a terrorist attack was imminent.
The decision to raise the threat level was made by the UK's Joint Terrorism Analysis Centre (JTAC).
THREAT LEVEL SYSTEM
Low - attack is unlikely
Moderate - attack is possible, but not likely
Substantial - attack is a strong possibility
Severe - attack is highly likely
Critical - attack is expected imminently
Mr Johnson said JTAC kept the threat level under constant review, making its judgments based on a broad range of factors, including the intent and capabilities of international terrorist groups in the UK and overseas.
He said: "We still face a real and serious threat to the UK from international terrorism, so I would urge the public to remain vigilant and carry on reporting suspicious events to the appropriate authorities and to support the police and security services in their continuing efforts to discover, track and disrupt terrorist activity."
Mr Johnson said the new level meant people needed to be "more aware".
The decision to raise the threat level was not specifically linked to the failed Christmas Day bomb attack on a plane bound for Detroit or to any other incident, he said.
He said the government would not reveal specific intelligence details.
"We never say what the intelligence is and it would be pretty daft of us to do that," he said, adding: "It shouldn't be thought to be linked to Detroit or anywhere else for that matter."
But the UK had not reached the highest threat level of "critical", which would mean an attack was imminent.
Move mirrors US
He added: "We have a very adept and very focused counter terrorism facility in this country, which consists of many police officers as well as security officers, so the public should be reassured by that."
The US Department of Homeland Security said the move meant the UK would be on a similar level of alert to America.
Frank Gardner, BBC security correspondent
Essentially four factors have prompted this: capability of terrorists looking to attack this country; their intent; the timing and the intelligence.
It is a bit of a spin off - it is not directly related but it's following the alleged attempt to bring down an airliner on Christmas Day in Detroit coupled with a lot of the intercepted signals coming out of al-Qaeda operatives in Yemen.
Measures were introduced last week to try to choke off any potential threat from Yemen.
But it is a wider picture - a kind of hubbub of raised chatter which, one has to assume, is being intercepted by eavesdropping agencies, that is all feeding into a big pot.
This is distilled by something called the Joint Terrorism Analysis Centre (JTAC) which sits inside MI5 24 hours a day, seven days a week, analysing the threat to Britain and its nationals.
They have concluded there is enough out there to raise it to the second highest level.
In a statement it said: "The UK is raising their measures to effectively where we are with the airport security measures that we have taken and announced over the last few weeks.
"We have enhanced our security measures and communicated specific information to industry, law enforcement and the American people."
BBC home affairs correspondent Daniel Sandford said the perceived threat from Yemen since the Christmas day attempted attack may be one factor behind the decision to raise the threat level.
But he added that there might be additional factors which have not been revealed by the government.
Prime Minister Gordon Brown announced on Wednesday that direct flights between Yemen and the UK were to be suspended over fears about their safety.
The change in threat level comes days ahead of two major international conferences on Yemen and Afghanistan in London on Wednesday and Thursday.
There are five levels of terror threat, ranging from low - meaning an attack is unlikely - to critical - when an attack is expected imminently. Severe is the second highest level on the scale.
The threat level was first made public on 1 August 2006, when it was set at severe. It was raised to critical on 10 August that year after a series of arrests over an alleged plot to blow up transatlantic aircraft but lowered to severe again the following week.
The threat level was last at critical in June 2007, following the attack on Glasgow Airport and the failed car bombings in central London.