Green Party peer Jenny Jones was arrested at a protest in Parliament Square, said the Green Party.
Baroness Jones was then "de-arrested", although it remained unclear whether she was subject to a police summons, said a Green Party spokesman.
One of Baroness Jones's close friends was being questioned by police and she held his arm as he appeared to be in distress, said the spokesman.
Police said they would decide whether to prosecute a 64-year-old woman.
The protest by Occupy was being held in defence of civil liberties and the right to protest.
'Out of sight'
Baroness Jones, who is also a London Assembly member, told BBC London 94.9 it was the first time she had been arrested despite years of protesting, "and I got a bit anxious".
Surrounded by police, with people shouting and her wrists being held, "I had a feeling just for a moment what it's like to be completely powerless", she said.
"All I'd been doing was supporting a friend," she said. "I was just there trying to support their civil liberties and their freedom of speech."
The Metropolitan Police said a 64-year-old woman was arrested in Parliament Square at about 11:00 BST "for obstructing police", and was then "de-arrested after giving details suitable for a summons".
The Met will decide "whether to proceed with a prosecution", the statement added.
Officers said they had arrested 15 other people sleeping on tarpaulin in Parliament Square after they failed to leave the area following requests from the police.
The Met said the group was prohibited from sleeping on the square under the Police Reform and Social Responsibility Act of 2011.
The group was taken to a central London police station.