The Streatham knife attacker was arrested in 2018 on suspicion of planning a terror attack – an offence that can carry a life sentence – but was charged with less serious crimes on the advice of prosecutors, it has emerged.

Sudesh Amman was 18 when counterterror police swooped on his family home in Harrow, after being tipped off over online posts where he claimed to be “armed and ready” for an attack.

Amman had written the slogan on a black flag, alongside a knife and two apparent firearms, after calling for attacks on “disbelievers” and a pro-LGBT+ speaker in Hyde Park.

Police initially arrested him on suspicion of preparing an act of terrorism, which can be punished with life imprisonment.

But a spokesperson for the Metropolitan Police said: “Following consultation with the Crown Prosecution Service (CPS) we did not charge with this offence.”

Streatham attack: Man shot dead by police after stabbings Show all 22 1 /22 Streatham attack: Man shot dead by police after stabbings Streatham attack: Man shot dead by police after stabbings Armed police officers on Streatham High Road. The Metropolitan Police warned people to stay away from the Streatham area boguta37/PA Streatham attack: Man shot dead by police after stabbings The man was shot dead by police after two stabbed in 'Islamist-related' terror attack in London boguta37/PA Streatham attack: Man shot dead by police after stabbings Sudesh Amman, the attacker, has been named as a convicted terror offender who was released from prison days ago Metropolitan Police/PA Streatham attack: Man shot dead by police after stabbings Items left on the pavement at the scene in Streatham High Road Isis supporter Amman was just 18 when he was jailed in December 2018 after police found a stash of bomb-making manuals and other propaganda. Now 20, he had declared his own wish to carry out a terror attack and stockpiled a combat knife, air gun and black flag at his family home in London PA Streatham attack: Man shot dead by police after stabbings He was being monitored by undercover police and being followed as part of a “proactive counterterrorism operation” when he started the rampage in Streatham AP Streatham attack: Man shot dead by police after stabbings Amman was able to stab two people before being shot dead by armed officers outside a busy row of shops Gabriel Video/PA Streatham attack: Man shot dead by police after stabbings A woman reacts as police officers interview people near to the scene Getty Streatham attack: Man shot dead by police after stabbings An armed police officer on Streatham High Road Deputy Assistant Commissioner Lucy D’Orsi said Amman was wearing a fake suicide ves Gully/PA Streatham attack: Man shot dead by police after stabbings Police forensic officers work outside of a Boots store AFP via Getty Streatham attack: Man shot dead by police after stabbings Police officers at the scene Getty Streatham attack: Man shot dead by police after stabbings A police forensic officer works at the scene in Streatham High Road PA Streatham attack: Man shot dead by police after stabbings Items left on the pavement at the scene in Streatham High Road PA Streatham attack: Man shot dead by police after stabbings A police officer on the scene Dave Chawner/SWNS Streatham attack: Man shot dead by police after stabbings Police forensic officers are seen near the site Reuters Streatham attack: Man shot dead by police after stabbings Police officers on the scene outside an Iceland supermarket Andy Bullemor/SWNS Streatham attack: Man shot dead by police after stabbings Police are seen near a site where a man was shot Reuters Streatham attack: Man shot dead by police after stabbings A policeman secures the site of the incident EPA Streatham attack: Man shot dead by police after stabbings A view of the scene Megan Tobeck Streatham attack: Man shot dead by police after stabbings Armed police at the scene in Streatham High Road PA Streatham attack: Man shot dead by police after stabbings A view of the scene Michael Owens Streatham attack: Man shot dead by police after stabbings Police forensic officers at the scene PA Streatham attack: Man shot dead by police after stabbings A Police officer is seen near a site where a man was shot Reuters

Amman later pleaded guilty to six counts of possessing a document containing terrorist information, and seven counts of disseminating a terrorist publication.

Sentencing him to three years and four months in prison in December 2018, Judge Mark Lucraft QC confirmed that Amman had declared a pledge of allegiance to Isis and discussed carrying out attacks using knives and acid.

“In the notebook found in the search where you made notes about explosives and detonators you also note ‘goals in life’ that include a desire to die as a martyr and to go to paradise,” the judge told the extremist at the Old Bailey.

The court had heard how Amman started collecting terrorist propaganda aged 17, shared it with children as young as 11 and incited his girlfriend to behead her “kuffar parents”.

Among the numerous terror manuals he collected were two dedicated to “knife fighting” techniques.

If Amman had been convicted of preparing a terrorist act, rather than the propaganda offences, he would have received a longer “extended determinate sentence” forcing him to undergo a Parole Board assessment before being released.

But he was freed automatically after serving half of his term in prison last week, and sent to a probation hostel in London under licence conditions.

On Monday, the justice secretary said the government was planning to introduce emergency legislation to ensure terrorists are not automatically released from prison halfway through their sentence.

Robert Buckland told the Commons that "yesterday's appalling incident makes the case plainly for immediate action".

Scotland Yard said undercover police officers were following him on foot as part of a “proactive operation” when he launched his attack in Streatham on Sunday.

The 20-year-old was shot dead, while wearing a fake suicide vest, but the two victims he stabbed survived.

Streatham terror attack: What we know so far

It was the third terror attack in just over two months to be carried out by a convicted terrorist in Britain, following stabbings at Fishmongers’ Hall and inside HMP Whitemoor.

Isis claimed responsibility for the stabbing with a generically worded statement on Monday morning, which suggested the group was working from news reports rather than direct communication with Amman.

His mother, Haleema Faraz Khan, told Sky News that he was a “nice, polite boy” who had seemed “normal” when she visited him at his probation hostel on Thursday.

She said he had become more religious since being in prison, and that she believed he had been radicalised while in HMP Belmarsh.

She added: “He was watching and listening to things online which brainwashed him.”

Amman’s trial heard that he started collecting terrorist propaganda at the age of 17 – in the same year where he was handed youth referral orders for possessing cannabis and an offensive weapon.

A former neighbour in Harrow told the Evening Standard he became religious at around that time, adding: “He had been in a bit of trouble for selling weed. He then started wearing the robes and being religious.”

It comes after research showed a significant number of Isis recruits across Europe had criminal convictions, and were drawn to terrorism as a means of gaining purpose and salvation.

The former head of counterterror police warned on Monday that “more dangerous people” are now being released from British prisons than returning from Syria.

There have been repeated warnings – including by the Parole Board and a government review – over rampant Islamist radicalisation and networking in British jails.

There are currently more than 200 people jailed for terror offences in the UK, but up to 800 inmates have been flagged as potential extremists. Prison officers fear the real number is far higher.

Recent cases have shown that terrorists are able to network and radicalise others inside prisons, and may be faking compliance with deradicalisation schemes.