The FTSE 100 Index equalled its worst one-day fall since the financial crisis today as it plunged by nearly 5%.
London's top-flight was more than 6%, or 400 points, lower during the session as contagion from China's growth slowdown spread across the globe.
The FTSE pared back some of the losses later but still closed down by 4.7%, or 288.8 points, a loss of £74 billion from the value of its constituent companies and equalling a 4.7% drop seen in September 2011.
Today's figures took the market into territory last seen in the dark days of the downturn. In March 2009, there was a single-day fall of 5.3% while there were even bigger falls late in 2008 - including an 8.8% decline in October that year.
Trading screens turned red today as the latest dive added to a drop of nearly 3% last Friday. The index fell below the 6,000-mark before reaching levels not seen since November 2012, at below the 5,800-mark, before heading higher to close at 5898.9.
The FTSE 100 saw its 10th session in a row of falls - the worst losing streak since it finished lower for 11 days in succession in 2003.
Investors were reacting to the latest stock market rout in China overnight. The Shanghai composite, down heavily in recent weeks, slipped by more than 8% and has now lost all its gains for 2015 - despite attempts by Beijing to arrest the slump.
Markets in Europe took it as a cue for another bout of selling, before a steep opening fall of more than 6% on Wall Street markets added to the pressure.
Depreciation of the yuan
Global markets have been rocked in recent weeks by China's slowing economy and the depreciation of the yuan - as well as plunging commodity prices and fears over the timing of the next US interest rate hike.
The worries have seen the FTSE 100 officially enter "correction" territory more than 10% down from its all-time high of 7104 in April.
The latest fears about China boiled over last week after a key manufacturing index for the country showed the sector's decline worsening, with performance at its lowest level in more than six years.
Jasper Lawler, market analyst at CMC Markets, said: "The Chinese government's intervention into stock markets has proven counter-productive.
"Forcing institutions to buy and banning them from selling has just added to the panic of retail investors who make up 80% of stock ownership in China."
He said that one reason for anxiety spreading to global markets could be that the crisis showed China's central bank "spectacularly failed" to stimulate the economy - at a time when their huge stimulus is underpinning recovery in Europe and the US.
Laith Khalaf, senior analyst at Hargreaves Lansdown stockbrokers, said: "The summer slump continued into its third week as global stock markets sold off once again.
"Here in the UK the Footsie has been decimated in ten days, as fears over global growth have gripped international investors.
"It was just five months ago investors cheered as the Footsie broke through the 7,000 mark for the first time; it now looks like a very long climb back."