One person has been killed and two attackers shot by police near a military training barracks in London, officials say.
Witnesses said the victim was hacked to death with a machete-style knife in the Woolwich district in the southeast of the British capital on Wednesday.
Video footage filmed by an onlooker and broadcast by Britain's ITV news channel showed a man with hands covered in blood and holding a bloodied meat cleaver and a knife.
"I apologise that women had to witness this today but in our lands, our women have to see the same," he said. "You people will never be safe. Remove your government, they don't care about you."
Media reports said the victim was a serving British soldier.
"It is the most appalling crime," Prime Minister David Cameron said, before cutting short a visit to Paris.
"The police are urgently seeking the full facts about this case but there are strong indications that it is a terrorist incident."
Home Secretary Theresa May chaired a meeting with the government's emergency COBRA security committee on Wednesday night in response to the attack. Another meeting is expected to take place on Thursday and will be hosted by Cameron.
She said two men were shot by armed police and were receiving treatment for their injuries.
Al Jazeera's Laurence Lee said that two mosques had been attacked overnight on Wednesday.
"The English Defence League, a far right group, wanted to use this to their advantage, they came out last night chanting 'no surrender to Muslims,' and clashed with riot police.
"That expression of theirs has been widely echoed. There were two attacks on mosques overnight and there is a growing unease of unease about who this man was and whether he is part of a broader movement."
Witnesses said the victim was wearing a T-shirt of military charity Help for Heroes, which assists wounded British veterans.
He was reportedly first hit by a car before the two men in that vehicle came out with a machete and a gun and started to attack to man.
Witnesses said the attackers had fearlessly approached police when they arrived and were then shot.
Al Jazeera's Laurence Lee, reporting from London, said people on social media platforms were expressing anti-Muslim sentiment after the incident as the men were said to have shouted "Allahu Akbar" as they attacked the man.
"It's the kind of incident that lends itself very much to rumour and speculation," he said. "People who have a pre-set agenda will be making the absolute best of it if they think it can further their cause."
The far-right English Defence League called on supporters to mobilise.
Britain's Ministry of Defence said it was urgently investigating reports that a serving soldier was involved in the incident.
Security was tightened in the area and at all London barracks after the incident.
The Muslim Council of Britain condemned the attack, saying: "This is a truly barbaric act that has no basis in Islam and we condemn this unreservedly."
In July 2005, four suicide bombers attacked London's public transport network, killing 52 people and wounding hundreds. A similar attempted attack two weeks later was thwarted.
British counterterrorism chiefs have recently warned that radicalised individuals, so-called lone wolves who might have had no direct contact with al-Qaeda posed as great a risk as those who plotted attacks on the lines of the 2005 attacks.
Shiraz Maher of the International Centre for the Study of Radicalisation at Kings College, told Al Jazeera that British security services have become very good at foiling large-scale conspiracies.
He said al-Qaeda has now told Muslims in the West who are sympathetic to their cause to instead launch small-scale attacks, without talking to others, "maybe do it alone, or with another friend; get a knife, get a machete.
"As you see in those kind of attacks, it doesn't take much to cause widespread panic and fear, so they are almost impossible for police to guard against," he said.
Britain's involvement in the wars in Afghanistan and Iraq in the past decade has occasionally made soldiers a target at home. British police have foiled at least two major plots in which suspects were accused of planning to kill off-duty troops.
Ahmed Jama, a 26-year-old resident in Woolwich, laid flowers down at the scene as a sign of respect to the families involved.
"This has nothing to do with Islam, this has nothing to do with our religion. This has nothing to do with Allah," he said.
"It's heartbreaking, it's heartbreaking."