British Prime Minister David Cameron said the brutal killing of a soldier who was hacked to death in London by two men shouting Jihadist slogans was a betrayal of Islam.
"We will never give in to terror or terrorism in any of its forms," Cameron told reporters outside his Downing Street residence.
"This was not just an attack on Britain and on the British way of life, it was also a betrayal of Islam and of the Muslim communities who give so much to our country.
There is nothing in Islam that justifies this truly dreadful act."
His comments come as tensions reach breaking-point in the southeast London suburb where a British soldier was brutally hacked to death in a suspected terror attack.
The man was attacked by two men wielding machetes and butchers knives, in broad daylight earlier today - around 2.50pm local time (3.50am NZT) - in Woolwich, southeast London. Soon after the attack, two men carrying weapons were shot and wounded by police. They are now in hospital, under armed guard.
The attack near an Army barracks has seen members of the right-wing group English Defence League clash with police in the streets near the killing.
The Daily Mail reported EDL leader Tommy Robinson, who was among a group of about 250 men, said: "They're chopping our soldiers' heads off. This is Islam. That's what we've seen today."
ONE News reporter Alexi O'Brien, reporting from near the scene of the death, said bottles were thrown at police, and there was a "tense" atmosphere as protesters chanted "EDL".
Meanwhile, a 43-year-old man was arrested on suspicion of attempted arson after reportedly walking into a mosque with a knife in Braintree, Essex. Another attack on a mosque was also reported in Kent.
The rising tensions have seen security stepped up around the military barracks located 200 metres from the attack. Senior armed forces confirmed the victim was a member of the armed forces, the BBC reports.
The unidentified assailants, believed to be two men aged in their 20s, tried to behead the man while shouting "God is greatest" in Arabic, media reports said.
Police and British authorities are treating the attack as an act of terror.
'Inspired by the Boston bombers'
Metropolitan Police Commissioner Sir Bernard Hogan-Howe says officers from the counter-terrorism unit are leading the investigation into the murder.
"It is hard to comprehend the shocking and horrific scenes we have seen this afternoon on a busy street as Londoners went about their day as normal," the Press Association quoted him as saying.
"We have launched a murder investigation, being led by the Counter Terrorism Command. Two men have been arrested in connection with that murder."
A counter-terrorism expert has suggested the attackers who brutally hacked a man to death on a London street, could have been inspired by the Boston bombers.
Richard Barrett, a former United Nations co-ordinator for the al-Qaeda and Taliban monitoring team, who has served with MI5 and MI6, said the two men arrested in connection with the knife attack could have been "copy cat" terrorists.
Barrett said the pair - thought to be of Nigerian descent - could have been inspired by alleged Boston bombers Tamerlan Tsarnaev, 26, and his 19-year-old brother Dzhokhar. The Chechen brothers are suspected of planting two bombs at the Boston Marathon on April 15, in which three people were killed and 264 injured.
"I don't think we have seen much of this in terms of attacks on armed service personnel in the UK before," PA quoted Barrett as saying.
"It may be that this is a copycat after the Boston bombings. That two individuals could cause a lot of mayhem is maybe more of an inspiration than attacking soldiers."
He said it was clear the attackers wanted to "explain" their actions.
"It looks like an attack which has certainly been done for effect," he said.
"The way that they are hanging about and wanting to be arrested and explain what they were doing fits a pattern of people who want to send a message.
"The idea that this may be terrorism-inspired by some sort of religious extremist belief is quite plausible."
Witness reports suggested the two attackers waited at the scene, asking people to film the events.
Pools of blood stained the street where the attack took place. 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 knife.
In the clip, the man, looking agitated and angry, said: "I apologise that women had to witness that, but in our lands our women have to see the same thing.
"You people will never be safe. Remove your government. They don't care about you."
The man is thought to have been referring to Afghanistan, where British troops are part of the international force supporting the Kabul government in its fight against Taleban insurgents.
A number of weapons were reportedly used in the attack, including a firearm, police said. Security has been tightened at all London barracks.
One witness, identified only as James, told the Press Association he saw two men attacking another man, aged in his twenties, who was wearing a T-shirt supporting military charity Help for Heroes.
"These two guys were crazed... They dragged him from the pavement and dumped his body in the middle of the road and left his body there," he said.
'Sickening and barbaric'
British Prime Minister David Cameron cut short a visit to France to return to London and chair an emergency national security meeting, known as a Cobra committee.
"It is the most appalling crime," Cameron said in 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 said in a statement: "This is a sickening and barbaric attack."
She said the murder was "an attack on everyone in the UK", and added: "Despicable acts like these will not go unpunished."
The Muslim Council of Britain has condemned what it called a "truly barbaric act", which has "no basis in Islam".
"This attack on a member of the Armed Forces is dishonourable, and no cause justifies this murder," it said in a statement. "This action will no doubt heighten tensions on the streets of the United Kingdom.
"We call on all our communities, Muslim and non-Muslim, to come together in solidarity to ensure the forces of hatred do not prevail."
Cameron cut short talks with French President Francois Hollande to return home.
"We have had these sorts of attacks before in our country and we never buckle in the face of them," he said.
On Twitter, the Mayor of London Boris Johnson described the attack as a "sickening deluded and unforgivable act of violence".
London was last hit by a serious terror attack in July 2005, when four young Islamists set off suicide bombs on the public transport network, killing 52 people and wounding hundreds. A similar attempted attack two weeks later was thwarted.
British counter-terrorism 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.