The area around the iconic bridge, where shops were closed down and an "enormous" police cordon was placed after the incident occurred, was still in lockdown and people have been advised to avoid the area as police hunted around the scene for any more threats though clarifying that a "vest" on the suspect was a "hoax device", the BBC reported.
Addressing the press in the evening, Assistant Commissioner for Specialist Operations, Neil Basu, said that approximately at 2 p.m., "police were called to a stabbing at a premises near the London Bridge" and emergency services including officers from the City of London Police and the Metropolitan Police reached the spot.
"A male suspect was shot by specialist armed officers from the City of London Police and I can confirm that this suspect died at the scene.
"A number of other people received injuries during the incident and as soon as we can provide further updates on their condition, we will. Our heartfelt sympathies go out to those anxiously awaiting news from their loved ones," he said.
"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," Basu said.
"Officers from the Met's Counter Terrorism Command are now leading this investigation. I must stress, however, that we retain an open mind as to any motive. It would not be appropriate to speculate further at this time," he said.
The Assistant Commissioner said that due to reports that the suspect may have had an explosive device, specialist officers reached the scene "and wide cordons are in place to ensure there remains no further danger to the public".
"However, I can confirm that at this time, we believe a device that was strapped to the body of the suspect is a hoax explosive device. Officers continue to carry out meticulous searches in the area to ensure there is no outstanding threat to the public," he said.
He said the "extensive cordons will remain in place for a considerable time" and public was requested to continue avoiding the area, while anyone with information, image or footage of the incident should share them with their investigation teams.
The incident evoked memories of the 2017 terror attack on London Bridge when a van was deliberately driven into pedestr before its three occupants ran to the nearby Borough Market area and began stabbing people in and around restaurants and pubs, leaving eight people dead and 48 injured. The attackers, who claimed allegiance to the Islamic State, were shot dead by the police.
A BBC reporter on the spot said that he had seen a group of men involved in a fight on the bridge, before the police reached the spot and shots were fired.
"There appeared to be a fight going on on the other side of the bridge, with several men attacking one man.
"Police then quickly arrived, including armed police, and then a number of shots were fired at this man," he reported.
According to the BBC, a video filmed from a nearby bus showed the apparent suspect appearing to be shot as he lay on the ground, while another man in a suit and jacket could be seen running away from him, having apparently retrieved a large knife.
The BBC also quoted a woman passenger on a bus crossing the bridge that she had seen police grappling with a "tall bearded man", and wrestling him to the ground, before he pulled back his coat to show that he was wearing "some kind of vest", which made police retreat from him.
Prime Minister Boris Johnson, in a tweet, said that he was being updated on the incident and wanted to thank the police and all emergency services for their response.
Home Secretary Priti Patel also tweeted that she was "very concerned" about the incident.
Labour leader Jeremy Corbyn tweeted: "Shocking reports from London Bridge. My thoughts are with those caught up in the incident. Thank you to the police and emergency services who are responding."
London Mayor Sadiq Khan, who said that he was "in close contact with the Met Commissioner" over the incident, said in a statement that his "heart goes out" to those injured in "today's horrific attack".
"We must and we will stay resolute in our determination to stand strong and united in the face of terror. Those who seek to attack us and divide us will never succeed," he asserted.
( With inputs from IANS )