The gunman nehind the Sydney café siege, Man Horan Monis, was not on a terrorism watchlist, Australian prime minister Tony Abbot has revealed.
He was, however, "well known" to police, Mr Abbott added.
Australian Prime Minister Tony Abbott has warned that people face a "very real threat" from extremists.
In a press conference after the 16-hour siege at a café in Sydney, Mr Abbot said there were people with the "will and capability" to carry out terrorist attacks in the country.
He said he shares people's "outrage" that gunman Man Horan Monis was allowed out on bail despite being implicated in a string of serious offences, and vowed that an investigation would be launched.
But he told reporters that he believed even if Monis had been under 24-hour surveillance, the seige may still have happened.
Australian Prime Minister Tony Abbott has condemned the "appalling and ugly" incident which left two hostages dead after a 16-hour hostage situation in Sydney.
In his first speech since arriving in the city, he said he refused to use the term "Islamic State", referring to it only as a "death cult" with "nothing to do" with any religion.
He also thanked New South Wales Police for their work in ensuring as many of the captives as possible escaped alive as he said it had been "one of the most difficult 36 hours in our history".
Earlier, he visited the scene of the attack where hundreds of people have laid flowers and left messages of condolence.
A Channel 7 presenter broke down in tears live on air as she realised she knew one of the victims of the café siege in Sydney.
Natalie Barr, who presents the channel's Sunrise programme, found out that mother-of-three Katrina Dawson - the sister of one of her friends - was among those killed in the 16-hour attack.
Reports claim Ms Dawson, aged 38, was trying to protect her pregnant friend from gunfire when she was shot and killed.
Miss Barr was co-hosting from the scene with fellow presenter David Koch when she realised who the victim was, and had to hand over to her colleague while she composed herself.
Australian Prime Minister Tony Abbott has flown into Sydney to pay his respects to the victims of a 16-hour armed siege at a café in the city.
The PM joined hundreds of others in laying flowers near the site of the attack and stood for a moment in silence, before writing a message of condolence in special books at the scene.
Hundreds of floral tributes have been laid near the café where two people were killed in a 16-hour hostage stand-off in Sydney, which ended with the death of the gunman.
Special trellis tables have also been set up to allow people to write messages of condolence.
A government building in Australia has been evacuated after a suspicious package was found in the canteen, police have said.
The package was spotted in the Department of Foreign Affairs in Barton. The bomb response team is in attendance and roads have been closed in the surrounding area.
Two pregnant women, a 75-year-old and a policeman were among those injured in the café siege in Sydney.
Police have said their officer was hit in the face with shotgun pellets, while the 75-year-old woman was shot in the shoulder.
The two pregnant women were taken to hospital for assessment.
All are said to be in a stable condition.
The two hostages killed in a 16-hour siege in Sydney have been praised as "heroes" at a special mass in the city.
Mother-of-two Katrina Dawson, aged 38, was reportedly trying to protect her pregnant friend from being injured when she was shot and killed.
And the 34-year-old manager of the Lindt café, Tori Johnson, had spotted an opportunity and tried to wrestle the gun away from Iranian refugee Man Horan Monis.
The weapon went off in the struggle, killing Mr Johnson - but it sparked the police surge on the building which saw the remaining hostages rescued alive.
The revelations were made at a special mass at St Mary's Cathedral near the café, held to mark the end of the horror attack.
Meanwhile, president of the New South Wales Bar Association, Jane Needham, has paid tribute to Ms Dawson who worked as a lawyer in the region.
Katrina was one of our best and brightest barristers who will be greatly missed by her colleagues and friends.
A special memorial service is being held in Sydney to mark the end of a 16-hour siege which ended with the death of two hostages.
Hundreds of people have gathered at St Mary's Cathedral in the city, around 500 metres from the Lindt café where the attack took place, to pay their respects.