A terror suspect wearing a hoax suicide vest has been shot dead by police on London Bridge after he stabbed five people, fatally wounding two, on the London Bridge on Friday.

The other three stabbing victims, a woman and two men, have been taken to the hospital for treatment. 

The suspect has been identified as 28-year-old Usman Khan, who had been convicted for terrorism offenses in 2012 and left the prison in December 2018 on license, UK police confirmed in a statement.

According to videos circulating on social media, Khan was wrestled to the ground by a group of bystanders, and a man in a suit dislodged his knife before armed police arrived and shot him.

London Mayor Sadiq Khan applauded the "breathtaking heroism" of the bystanders "who literally ran towards danger," not knowing what it was they were faced with. 

Witnesses described how they "ran like hell"  following a knife attack and the sound of gunshots on London Bridge in the UK capital, Sky News reported. 

Neil Basu, the UK's head of counter-terrorism, confirmed they were treating the incident as a terrorist attack.

"As you would expect, due to the nature of the incident, we responded as though it was terrorist-related. I am now in a position to confirm that it has been declared a terrorist incident. We are working jointly with the City of London Police as we continue to respond," he told reporters Friday afternoon. 

Prime Minister Boris Johnson said he is "being kept updated on the incident at London Bridge" and thanked the police and all emergency services for their quick response.

The London Bridge was the site of a terror attack in June 2017 when a vehicle was used to ram into pedestrians on the bridge. 

(With input from The Telegraph, Reuters)