The 24-year-old singer, who found fame with N-Dubz, was arrested along with a 35-year-old man by appointment at a central London police station and they both remain in custody.
The arrests come after the Metropolitan Police said its officers were 'considering' information after a newspaper suggested Contostavlos had acted as a go-between in a drug deal by introducing a journalist to an alleged supplier.
The report claimed Tulisa allegedly boasted to a tabloid reporter about her links to drugs and claimed to be able to get hold of 'whatever you want'.
During one meeting, Tulisa allegedly said: 'Half my phone book sells it. Of course I can get it for you. Half the guys I know are drug dealers.'
The Sun reported that her friend, rapper Mike GLC, then allegedly sold half an ounce of cocaine worth around £800 to a reporter at London's Dorchester hotel as a result of the deal.
Her £6million mansion was this afternoon being searched by detectives who arrived at her property with evidence bags and a search book.
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