A British national and a student at a Canadian university have been arrested on suspicion of involvement in last month's deadly siege at a cafe in Bangladesh's capital, police said Thursday.

Hasnat Karim, a Bangladeshi origin British citizen, and Tahmid Khan, who is a student at the University of Toronto, were detained on Wednesday night, police spokesman A.K.M Shahidur Rahman told AFP.

‘We can confirm that they were arrested under Section 54 of CrPC (criminal procedure),’ Rahman said, referring to a law under which police can detain someone for suspicion over any crime.

Rahman said that police had applied to magistrates for permission to remand Karim and Khan in custody for 10 days but there has been no response to their application so far.

Karim and Khan were both inside the Holey Artisan cafe when gunmen raided the premises on the night of July 1, taking a group of mainly Western diners hostage and then killing 20 of them, along with two policemen.

But neither man has been seen in public since the end of the siege when commandos stormed the cafe in Dhaka's upmarket Gulshan neighbourhood on the morning of July 2.

Their families have previously said that both Karim and Khan were being held by the security services, insisting there is no evidence to link them to the attackers and that they were no more than innocent bystanders.

Reports in local media said both were being investigated for suspicious activity during the siege. They said Khan was seen holding a firearm and Karim strolling with the attackers on the roof.

The 47-year-old Karim was a lecturer at Bangladesh's private North-South University in Dhaka which was the alma mater of two of the five attackers who were gunned down at the end of the siege.

More recently, he had been working as a director at his father's engineering company in Dhaka.

The 22-year-old Khan, who is a Bangladeshi citizen, was back in his homeland while on leave from his university in Canada.

Police earlier this week named a Canadian citizen called Tamim Chowdhury as the mastermind of the attack, offering a reward of up to $25,000 for any information leading to his arrest.

The siege at the Holey Artisan cafe was by far the deadliest in a string of attacks claimed by Islamist groups which have blighted Bangladesh over the last three years.

The so-called Islamic State organisation claimed responsibility for the attack and the gunmen were all pictured posing with IS flags in images posted on a website affiliated to the group.

Prime Minsiter Sheikh Hasina's government has said however that the attack was the work of a homegrown Islamist group, insisting international jihadist groups have not got a foothold in Bangladesh.