A new offence relating to possession of terrorist propaganda that glorifies or encourages extremism could be introduced to toughen up UK anti-terror laws.

The Home Office said it was considering fresh legislation in response to the Prevention of Future Deaths Report by Mark Lucraft QC concerning last year’s inquests into the eight people killed in the 2017 London Bridge terrorist attack.

The inquests heard that a police raid on the home of the attack ringleader, Khuram Butt, in October 2016 uncovered Isis propaganda about martyrdom and suicide missions in material recovered from his phone and laptop. However there had been no charges. While legislation forbids distribution of extreme material, possession is only criminal if the material is useful in commission of a terrorist act.

In his report, Lucraft, the chief coroner for England and Wales, observed: “It may be impossible to take action even when the material is of the most offensive and shocking character.”

Responding on Tuesday, the home secretary, Priti Patel, said discussions were taking place as to whether there was “a gap in the current legislation from an operational perspective”.

She said: “The government notes the chief coroner’s comments regarding the evidence at the inquests, the existence of the offence for possession of a prohibited image of a child, and the perception that the lack of a comparative counter-terrorism offence may sometimes prevent counter-terrorism policing from taking disruptive action.”

The UK independent reviewer of terrorism legislation, Jonathan Hall QC, asked on Twitter for opinions as to whether a new offence were necessary. He said the new offence listing could be useful if framed in the right way.

He said: “Whilst propaganda is too slippery a term to be useful in defining a criminal offence, I think there is a good case for focusing on possession of the most violent forms of terrorist imagery such as torture and beheadings,.

“It is not always possible to show that a person has disseminated terrorist material, and, for a limited category of material – in the same way that the law prohibits the possession of child sex abuse images or extreme violent pornography it may be sensible to prohibit possession of extreme terrorist material.”

He said the prosecution should have to prove the material was produced to encourage or glorify terrorism, and that legislation had to avoid penalising journalists and human rights defenders.

But Rosalind Comyn, policy and campaigns officer at Liberty, said such a law was unnecessary. “The UK already has oppressive counter-terror laws which put our freedom to think, debate and learn in jeopardy. Making the law even more heavy handed would undermine our freedom of thought and our right to free expression, without making us any safer. It is critical that the government focuses on creating counter-terror strategies that keep us safe and free, protecting the rights terrorists seek to destroy.”

David Gottlieb, a defence lawyer in many high-profile terrorism cases, questioned whether the scope of the new law might be too wide, given the definition of terrorism in the UK.

David Gottlieb (@DavidAGottlieb) This might make more sense if the definition of terrorism was not as broad and far-reaching as it currently is: e.g. should mere possession of material which might encourage resistance to odious regimes that are not recognised by HMG as legitimate governments be an offence?

Lucraft, in his report, also raised concerns about the suspension of priority MI5 investigations into Butt. He had been under investigation since 2015 but it was suspended twice, in 2016 and again from 21 March to 4 May 2017, weeks before the attacks.

In its response to Lucraft, MI5 defended its suspension mechanism as effective and necessary but accepted a recommendation that the reliability of its potential lone actor assessment tool should be tested.

Butt, 27, was the first suspect under active investigation by MI5 who went on to kill. The only other to date was Usman Khan, who killed two people and injured three more beside London Bridge on 29 November last year.