British Prime Minister David Cameron was meeting Thursday with his top security advisers, one day after a man was butchered to death in broad daylight on a south London street near an army barracks.
Police have confirmed the victim was a soldier, but have not released his identity, at his family's request.
Media reports say the two suspects are believed to be British citizens of African descent. There is no official confirmation of their identities or nationalities.
Mr. Cameron called the killing "appalling," saying there are strong indications it was a terrorist incident. He chaired an emergency national security meeting after cutting short a visit to France.
Scotland Yard's counterterrorism unit is leading the investigation.
Police shot and wounded the attackers when they were being arrested and have placed them under guard in a hospital.
Witnesses say the suspects appeared to hack the victim to death with butcher knives, leaving a stream of blood on the sidewalk.
British television broadcast a bystander's video showing a man with blood-covered hands holding a cleaver and a knife. He said "you people will never be safe," and he vowed "an eye for an eye, a tooth for a tooth."
He apologized for women and children witnessing the killing, but said "in our land, women have to see the same." He did not say what land that is. British reporters said he appeared to be speaking with a London accent.
A State Department spokesman condemned the attack, saying the United States stands with its British allies in the face of such senseless violence