Questions have been raised over the release of terrorists from prison after a convicted extremist stabbed two people in south London.

Fanatic Sudesh Amman was shot dead by police after grabbing a knife from a shop and attacking two bystanders in Streatham on Sunday. A third person was injured by flying glass during the gunfire.

Amman, who was jailed for possessing and distributing terrorist documents in December 2018, had recently been freed from prison, and had been staying at a bail hostel in nearby Leigham Court Road for the past two weeks.

The 20-year-old was under police surveillance as he launched his attack, and was found to be wearing a fake suicide vest after he was shot.

Dramatic footage was posted online of armed officers warning members of the public to clear the area when they spotted the device in Streatham High Road.

The atrocity follows the attack at Fishmongers Hall in the City of London in November, when another convicted terrorist, Usman Khan, murdered two people despite being on probation.

Cambridge graduates Jack Merritt, 25, and Saskia Jones, 23, were stabbed to death at a rehabilitation conference.

The Government will announce plans on Monday for “fundamental changes to the system for dealing with those convicted of terrorism offences” following the Streatham attack.

Prime Minister Boris Johnson had already promised changes following November’s attack, with measures including forcing dangerous terrorists who receive extended determinate sentences to serve the whole time behind bars.

But the proposed changes would not have affected Amman, who was convicted of a less serious offence.

Streatham terror attack
Sudesh Amman was shot dead by armed police in Streatham High Road (Metropolitan Police/PA)

He would also have received a lower sentence because of his age and the fact that he pleaded guilty.

Former head of UK counter-terrorism policing Sir Mark Rowley said there was a “case” for giving terrorists indeterminate prison sentences.

But he told BBC Radio 4’s Today programme that they should also be given rehabilitation and de-radicalisation support so they can change their ways.

“If someone is clearly driven by an ideology and they believe that slaughtering other people is a sort of God-given purpose, then I can see a case for that,” said Sir Mark.

“As long as we put alongside it the rehabilitation and de-radicalisation programmes to give someone the opportunity to change their ways and be released.

“I don’t think there should be a lock-up-and-throw-away-the key – we need to be as equally aggressive about trying to help people turn their lives around as we are determined to protect the public.”

Streatham terror attack
Men carry Sudesh Amman’s body to a private ambulance (Isobel Fordsham/PA)

Scotland Yard said armed officers were following Amman on foot as part of a “proactive counter-terrorism surveillance operation” in Streatham High Road.

The three victims were taken by ambulance to south London hospitals.

One man, in his 40s, is no longer considered to be in a life-threatening condition following treatment, police said.

A woman, in her 50s, who had non-life threatening injuries has been discharged from hospital.

Police said a second woman, in her 20s, who suffered minor injuries believed to have been caused by glass following the discharge of a police firearm, continues to receive treatment.

Locates shooting in Streatham
(PA Graphics)

Mechanical engineering apprentice Jignesh Khomani, 20, a former neighbour of Amman in Harrow, north-west London, said he was “saddened” by the attack, and described him as “a pretty average guy”.

He told the PA news agency: “I just did not expect anything like this would happen. He did not seem like a character who would do something like that.”

A teenager, who said she knew Amman from the local neighbourhood but did not want to give her name, said he used to talk about being a terrorist but she and others thought he was joking.

IS supporter Amman, who at the time of his sentencing was 18 and living in Harrow, smiled and waved at the public gallery as he was jailed for three years and four months at the Old Bailey.

The court heard that he had listed dying a martyr as one of his “life goals”, and had posted al Qaida propaganda on a family WhatsApp group, exposing siblings as young as 11 to graphic material.

His stash of manuals on bomb-making, knife-fighting and close combat included the titles Bloody Brazilian Knife Fighting and How To Make A Bomb In Your Kitchen.

Police forensic officers works at the scene in Streatham High Road, south London
Police forensic officers at the scene in Streatham High Road (Victoria Jones/PA)

It has been reported that concerns were raised about him in prison.

Around 245 convicted terrorists were freed from jail between 2012 and 2019.

London Mayor Sadiq Khan said more than 70 people who have been convicted of a terrorist offence and served time in prison have been released in the capital.

Police continued investigations overnight, with search warrants being carried out at two addresses in south London and Bishop Stortford, Hertfordshire.