By Toby Melville and William James

LONDON (Reuters) - An assailant stabbed a policeman and was shot by police just outside Britain's parliament building in London on Wednesday in what police described as a "terrorist incident".

Amid confusing scenes, it appeared the incident may have unfolded in several locations, including on the nearby Westminster bridge where eyewitnesses said a car had crashed into pedestrians.

Two people died in the incident, according to Sky News, but the total number of casualties was unclear.

"Officers - including firearms officers - remain on the scene and we are treating this as a terrorist incident until we know otherwise," London's Metropolitan Police said in a statement.

The incident took place on the first anniversary of attacks by Islamist militants that killed 32 people in Brussels.

Reuters reporters inside the parliament building heard loud bangs and shortly afterwards saw two people lying on the ground in a courtyard just outside, within the perimeter of the parliamentary estate.

A Reuters photographer said he saw at least a dozen people injured on Westminster Bridge, next to parliament.

His photographs showed people lying on the ground, some of them bleeding heavily and one apparently under a bus.

"I just saw a car go out of control, and just go into pedestrians on the bridge," a woman who gave her name as Bernadette told Sky News. She was on a tour bus on the bridge at the time.

"As we were going across the bridge, we saw people lying on the floor, they were obviously injured. I saw about 10 people maybe. And then the emergency services started to arrive. Everyone was just running everywhere."

"HORRIBLE TO WATCH"

Some people suffered catastrophic injuries in the incident, British news agency the Press Association reported, citing a doctor at St Thomas's Hospital which is located directly across the River Thames from parliament.

Officials said an assailant had stabbed a policeman and then been shot.

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Witness reports suggested the assailant and the stabbed policeman were the people seen lying on the ground just outside the parliamentary building by Reuters reporters.

The House of Commons, which was in session at the time, was immediately suspended and lawmakers were asked to stay inside.

Prime Minister Theresa May was safe after the incident, a spokesman for her office said. He declined to say where May was when the attack took place.

Journalist Quentin Letts of the Daily Mail newspaper told LBC radio that he had witnessed the stabbing of the policeman and the shooting of the assailant from his office in the parliament building.

"He (the assailant) ran in through the open gates ... He set about one of the policemen with what looked like a stick," Letts said.

"The policeman fell over on the ground and it was quite horrible to watch and then having done that, he disengaged and ran toward the House of Commons entrance used by MPs (members of parliament) and got about 20 yards or so when two plain-clothed guys with guns shot him."

Reuters reporters inside parliament saw a large number of armed police, some carrying shields, pouring into the building.

U.S. President Donald Trump told reporters at the White House he had been briefed on events in London but gave no details.

In Edinburgh, the Scottish parliament suspended a planned debate and vote on independence as news of events in London came in.

Britain is on its second-highest alert level of "severe" meaning an attack by militants is considered highly likely.

In May 2013, two British Islamists stabbed to death soldier Lee Rigby on a street in southeast London.

In July 2005, four British Islamists killed 52 commuters and themselves in suicide bombings on the British capital's transport system in what was London's worst peacetime attack.

(Additional reporting by Kylie Maclellan, Elizabeth Piper, Costas Pitas, Michael Holden, Kate Holton and London bureau, writing by Estelle Shirbon, editing by Stephen Addison and Mark Trevelyan)