Two men wielding knives butchered and beheaded a man believed to be a British soldier in a busy London street, before delivering an Islamist tirade to passers-by.
Prime Minister David Cameron, condemning Wednesday's "appalling" attack, added: "There are strong indications that it is a terrorist incident."
Eyewitnesses described how after the two men carried out their attack, they stayed at the scene, asking passers-by to photograph and film them.
The attack happened near the Royal Artillery Barracks in Woolwich, southeast London.
Armed police shot and wounded the two attackers after bystanders had called them to the scene.