One man was shot dead by Scotland Yard in the south London borough of Lambeth on Sunday after he stabbed three people – one seriously – in what the police described as a terror incident, the second since the November 29 attack on London Bridge.

The police said in a statement after the attack: “Three people are known to have been injured in the #Streatham attack earlier this afternoon. One person is at hospital in a life-threatening condition. We are in the process of informing their family”.

“The scene has been fully contained…The incident has been declared as terrorist-related.”

The Streatham incident around 2 pm UK time came two months after the November 29 attack, when convicted terrorist Usman Khan killed two people being shot dead.

Prime Minister Boris Johnson tweeted on Sunday: “Thank you to all emergency services responding to the incident in Streatham, which the police have now declared as terrorism-related. My thoughts are with the injured and all those affected”.

London mayor Sadiq Khan, who is responsible for police in the capital, added: “Terrorist seek to divide us and to destroy our way of life – here in London we will never let them succeed.”

Witnesses spoke of three gunshots being fired and a man lying on the ground. Police helicopters and ambulances were quickly on the scene after the incident unfolded around 2 pm UK time. There were reports that the man may have carried an explosive device.

Gulled Bulhan, a 19-year-old student told the PA news agency: “I was crossing the road when I saw a man with a machete and silver canisters on his chest being chased by what I assume was an undercover police officer – as they were in civilian clothing”.

“The man was then shot. I think I heard three gun shots but I can’t quite remember. After that I ran into the library to get to safety. From the library I saw a load of ambulances and armed police officers arrive on the scene.”

“We were all informed to stay in buildings by armed police, until we were evacuated,” he said.

Chris Phillips, former head of Britain’s National Counter Terrorism Security Office, told the BBC that Sunday’s incident “looks very similar to what we saw on London Bridge…We can only hope that police have dealt with it fully now and that it’s one person acting alone”.

Bell Ribeiro-Addy, Labour MP for Streatham, said: “Obviously, we shouldn’t make it an issue to divide us because that’s what terrorism is. If we are afraid and if we are divided, then the terrorists ultimately win.