A quiet London suburb was on Wednesday the scene of a suspected "low-key" terror attack in which a man believed to be a serving solider was hacked to death by two armed men who reportedly asked shocked passers-by to take their photographs as they beheaded their victim with a machete-style knife.

The attackers, said to be in their 20s and in a disturbed state of mind, were shot by the police and taken to separate hospitals where they were being treated for gunshot wounds.

Prime Minister David Cameron, who was in Paris, said while police were still investigating there were "strong indications that it is a terror attack’’. He called it a "truly shocking" and a "appalling" incident.

The attack, which took place near a school in Woolwich, south-east London, sent shockwaves through the Capital as the government scrambled to make sense of it amid confusion about the identity and the motive behind the attack.

Eyewitnesses claimed that the attackers who, they said, looked "crazed" chanted "Allahu Akbar" as they belaboured their victim who was wearing a t-shirt with the logo "Help for Heroes", a fund-raising charity.

"These two guys were crazed. They were just animals. They dragged him from the pavement and dumped his body in the middle of the road and left his body there," one witness said.

Police said they were called to John Wilson street at 2.20 p.m. where "one man was being assaulted by two other men."

"On their arrival at the scene they found a man, who was later pronounced dead… Two men, who we believe from early reports to have been carrying weapons, were shot by police. They were taken to separate London hospitals, they are receiving treatment for their injuries," said Commander Simon Letchford as Home Secretary Theresa May called a meeting of the government's emergency response committee Cobra to assess the incident.

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