Police reportedly shot two men after they repeatedly hacked at a man, believed to be soldier, to death with a machete or meat cleaver, in Woolwich south-east London.
The incident took place in John Wilson Street and the entire area is now sealed off by police.
Photos from the scene show a number of men on the ground. A blue car, believed to be that used by the attackers, is crashed against a road sign. A large pool of blood can be seen on the pavement nearby.
Nick Raynsford, MP for Woolwich, told the BBC: "It's been verified one person is dead, two seriously injured."
The dead man is believed to be a serving soldier at the nearby Royal Artillery barracks,although the MoD has not confirmed the fact but said it si looking into the matter.
Eyewitness said the victim was wearing a Help for Heroes T-shirt.
Circumstances of the incident are yet not clear.
One unconfirmed eyewitness report said that two men on a Vauxhall car ran over another man before getting out of the vehicle and beheading him with a machete.
According to other reports the attackers hacked their victim using meat cleavers.
A shootout erupted as police arrived at the scene. The two men have been taken to hospital, one in a serious condition, The London Ambulance service confirmed.