Police cars and vans, including armed officers and dog units, descended on Millennium Village in Ketley and the police helicopter was deployed in the area.
Officers also closed off Hadley Road and Hartshill Park in Oakengates.
A woman in her 40s was treated by paramedics in Hartshill Park for "potentially serious" injuries and police have now confirmed a man has been arrested.
A police spokesman said: "At approximately 6.15am this morning police were called to Hadley Road over concerns a woman was being threatened by a man with a knife.
"The woman was taken to hospital with injuries consistent with knife wounds. Her injuries are not believed to be life-threatening.
"Throughout the morning police have been carrying out a search of the local area.
"A 60-year-old man has been arrested on suspicion of attempted murder and is currently in police custody.
"Increased patrols will remain throughout the day to offer reassurance to the local community."
Telford policing commander Superintendent Paul Moxley added: “We can confirm a man has now been arrested and is in police custody. We understand this incident caused some disruption this morning, in particular during rush hour and would like to thank the local community for the patience and understanding as we dealt with the incident.”
Murray MacGregor, spokesman for West Midlands Ambulance Service, said paramedics treated a woman in her 40s for potentially serious injuries in Hadley Road after being called to reports of a stabbing.
He said: "We were called to reports of a stabbing at 6.23am. Two ambulances and a paramedic officer attended.
"We have treated a woman in her 40s for potentially serious injuries. She has been taken to hospital."
One resident in Millennium Village has described doors banging as early as 7am and someone being arrested in nothing but their boxer shorts.
Police were seen searching cars and asking drivers to open their boots.
Officers have also been searching behind Rose Manor Sanctuary Living and the flats on that side of complex.
Reporter Nick Humphreys was at the scene:
Police appear to be focusing their search further down the Ketley Park Road now— Nick Humphreys (@nhumphreys_star) October 14, 2019
An officer is searching cars at the temporary traffic lights at Beveley Road, asking drivers to open their boots and checking inside too...— Nick Humphreys (@nhumphreys_star) October 14, 2019
Hartshill Park was mostly closed off this morning, with officers in the park redirecting those who go near away from the scene. Police tape was around the bandstand.
Officers had also closed off the end of Hadley Road and were standing watch on either side of the closure.
Anyone who was in the area at around 6.15am, including any motorists with dash cam footage, are asked to get in contact with police on 101 quoting reference 70s 141019.
Alternatively, contact Crimestoppers anonymously on 0800 555111 or at crimestoppers-uk.org
One resident has described doors banging as early as 7am and someone being arrested in nothing but their boxer shorts— Nick Humphreys (@nhumphreys_star) October 14, 2019
Officers have also been searching behind Rose Manor Sanctuary Living and the flats on that side of complex— Nick Humphreys (@nhumphreys_star) October 14, 2019
Chopper still hovering above the same area here. One woman who lives nearby says it’s been here since about 7.30 and described seeing a load of police cars “storming” through. No idea what’s gone one just yet— Nick Humphreys (@nhumphreys_star) October 14, 2019