It sounds like he is really freaking out when you hold him. Does anyone else handle him besides you?
When Gracie was a puppy she used to roll on her back and show me her teeth and growl.
I didn't know what I had gotten myself into and since I was the main care taker I could not blame anyone else. I found the best course of action was calm. When she would get into terrier mode I would withdraw from her calmly. If he gets a hold of your hand with his teeth try to go limp. Don't struggle. Usually the lack of response will cause them to lose interest since the idea is to get a response. Terriers like to shake their prey. If that doesn't work then you need to gently open his mouth with your other hand and remove your hand. Then put him down and end the encounter.
Make sure that there is no rough play with him at any time. Only calm play and nothing that would bring on growling. I did this with Gracie for several months. I did take her on walks and teach her to play fetch to wear her out. I also taught her to sit, stay, and down. The combination of calm play and discouraging the biting finally resulted in a well mannered dog but I thought I had a little terror at first. She will still sometimes play growl with her toy and shake the daylights out of them. Better them than me.
