Two Australian sisters injured in an acid attack in the UK say they feared they were caught up in a terrorist attack when chaos broke out at a London nightclub.

Twelve people were injured when a corrosive substance was thrown from a bottle at the Mangle nightclub in Dalston, east London, yesterday.

Australians Isobella and Prue Fraser, both aged in their 20s, said the chaos erupted after a fight broke out and two men were being targeted.

"Everyone was crying, it was horrific," Prue, who suffered a burn to her arm, told Seven Network today.

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Her sister said her shirt stuck to her skin when the substance hit her.

"I couldn't breathe," Isobella said. "I thought we were getting gassed, I thought it was a terrorist attack."

The sisters said some of their male friends had refused to go to hospital, believing their injuries to be minor, but the pair had persuaded them.

They were thankful their injuries were not more serious and said others were badly hurt when the substance hit them in the face.

Police said two men aged in their 20s were seriously hurt in the incident with the pair in a serious but stable condition in hospital.

"The substance is yet to be identified, but it is believed to have been acidic," police said in a statement.

The London Fire Brigade said the substance was identified by a PH paper test as a strong acidic substance.

The male suspect remains at large.

One witness, who asked not to be named, told Press Association the club was "very, very packed".

"I thought someone had dropped a cigarette on my foot but it was getting more red and stinging," she said.

"It is scary because you just go out to have a good night and you realise how close it could have been to being a lot worse."

- AAP