Police search homes in Streatham terror stabbing probe

British police were searching two homes on Monday (3) after shooting dead an extremist who knifed two people in London in an attack claimed by the Islamic State group, as the government vowed a review of the system for the early release of convicted terrorists.

Sudesh Amman, 20, who was wearing a fake suicide vest, was shot on a busy shopping street in south London on Sunday.

IS's propaganda arm called Amman "an IS fighter and he carried out the attack in response to a call to target nationals" of countries belonging to the global coalition fighting it.

Amman was recently freed early from prison after serving part of his sentence for a string of Islamist-related terror offences -- namely the possession and distribution of terrorist documents.

Counter-terror officers were conducting searches at one address in south London and one in Bishop's Stortford, north of the capital near London Stansted Airport.

Amman had been arrested in London in May 2018 on suspicion of planning a terrorist attack. He was jailed for three years and four months in December 2018 for 13 separate offences.

As part of what police said was a "proactive counter-terrorism surveillance operation", armed officers were following him on foot following his release.

- PM plans law change -

Sunday's incident came just over two months after a similar incident when armed police shot dead a convicted terrorist on early release near London Bridge in the heart of the city.

He had stabbed two people to death after attending a prisoner rehabilitation conference.

Prime minister Boris Johnson said plans would be announced later Monday to change the system on handling the release of convicted terrorists.

He had previously promised such changes following the London Bridge attack.

"What was he (Amman) doing out on automatic early release and why was there no system of scrutiny, no parole system to check whether he was really a suitable candidate?" he told reporters.

"Looking at the problems we have with re-educating and reclaiming and rehabilitating people who succumb to Islamism, it's very, very hard and very tough -- and it can happen that the instances of success are really very few.

"My anxiety is that we do not want to get back to a system where you have a lot of very, very, laborious surveillance by our hard-pushed security services.... when a custodial version might be better."

London mayor Sadiq Khan meanwhile told ITV television he was "angry" that the government had not already acted to change the law.

The Labour party politician said there were "roughly" more than 70 people in London who have been convicted of a terrorist offence, served time in prison and have been released.

Britain downgraded its terror threat level from "severe" to "substantial" -- the third-highest of five levels, warning a terrorist attack is considered "likely" rather than "highly likely" -- in early November.

That was its lowest rating in more than five years.

- Shock -

Amman had been staying in a nearby hostel for newly-released prisoners, according to British media.

He stole a knife from a cheap goods store, then attacked a woman, then a man further up the high road, before being gunned down.

Eyewitness video footage showed him writhing on the pavement outside a pharmacy as plain-clothes armed police officers pointed hand-held weapons at him and urged passers-by to get to safety.

Amman had a dark vest with silver canisters strapped to his body.

"I'm still shocked," said Karker Tahir, who works in a barber's shop on the winding high street. "He was running and he was shot. Police keep saying to him, 'Don't move'.

"He was alive, on the floor, a few minutes. I can see him moving his head."

Tahir said the police told him and his customers to leave through a back exit in case Amman's vest exploded.

- Two in hospital -

Police cordons remained in place at the scene in Streatham on Monday.

Forensics officers in protective suits and officers in dark uniforms could be seen working outside the pharmacy where Amman was shot dead.

The male victim, who is in his 40s, was in a non-life-threatening condition in hospital while the woman, in her 50s, has been discharged from hospital, police said.

Another woman in her 20s has minor injuries, thought to have been caused by broken glass following the police shooting of Amman. She was continuing to receive treatment in hospital.