Isis has claimed responsibility for the attack, which left 30 people injured when a bomb partially exploded on a District Line train on Friday morning.
Soldiers who had been drafted in to guard public sites in order to free up police resources will "return to their original positions" over the next few days, Ms Rudd said.
Mayor of London Sadiq Khan said: "Thanks to the dedicated work of our police officers and intelligence services, the UK's threat level has now been lowered from "critical" to "severe".
British police are searching a home in the London suburb of Stanwell linked to the arrest of the second suspect in the subway bombing.
British Home Secretary Amber Rudd dismissed US President Donald Trump's tweets in the wake of Friday's terrorist attack in London as "pure speculation".
On Saturday, a search was carried out at a house in Sunbury-on-Thames, Surrey - home to foster care couple Penelope and Ronald Jones, aged 71 and 88 respectively, who previously received MBEs for services to children and families.
Just one person is being treated at Chelsea and Westminster Hospital, which has a specialist burns unit.
A friend, Alison Griffiths, said they are "great pillars of the community" who have taken in several hundred children in the last 40 years.
It comes after police arrested a 21-year-old man in Hounslow at 11.50pm on Saturday.
'It's never helpful to have speculation about an ongoing operation and I would include the president of the United States in that comment, ' she said in an interview with the BBC's Andrew Marr on Sunday.
Two men are now in custody for possible roles in the bombing attack on a rush-hour subway train Friday that injured 29 people in London.
Her announcement came after two people were arrested in connection with the blast.
"The threat level remains at critical and there will be further investigations and part of the operation later today", Rudd told reporters.