Armed police carry out an operation outside the cafe where a gunman had taken people captive in the central business district of Sydney on December 15, 2014
Two hostages and an extremist Iranian-born gunman were killed in a siege that ended when armed police stormed a central Sydney cafe Tuesday, as a shocked Australia struggled to come to terms with the tragedy.
Police in SWAT-style gear hurled percussion grenades and opened fire in the early hours of the morning after a number of staff and customers managed to flee for their lives from the Lindt eatery in the heart of Australia's biggest city.
They moved in after hearing gunfire, and the 50-year-old lone gunman, widely named in the media as Man Haron Monis, was shot and killed in the exchange that followed, New South Wales Police Commissioner Andrew Scipione said.
A man aged 34, and a woman identified as 38-year-old mother-of-three Katrina Dawson, were pronounced dead among the 17 hostages. Several others were injured.
"He had a long history of violent crime, infatuation with extremism and mental instability," Prime Minister Tony Abbott said of the hostage-taker, who had earlier unfurled an Islamic flag at the window of the cafe.
"As the siege unfolded... he sought to cloak his actions with the symbolism of the ISIL death cult."
Abbott said the man, on bail for a series of violent offences, was known to authorities as he praised police, saying Australians "should be reassured by the way our law enforcement and security agencies responded to this brush with terrorism".
"Plainly, there are lessons to be learned and we will thoroughly examine this incident to decide what lessons can be learned," he said.
Emotions were raw as Australia awoke to the news that two innocent victims were dead. Bouquets of flowers were laid at a makeshift memorial near the scene while shocked commuters stopped at the site to honour those who died.
"I'm just here today to pay my respects to the people that lost their lives yesterday -- it's so sad," one of those bearing flowers, Angelica Haifa, told AFP.
"They were just going to work like everyone else, just going to get a cup of coffee. That could have been absolutely anyone."
Representatives from the Muslim community, which has condemned the hostagetaking and the use of the flag, were also to lay flowers.
Flags on all Commonwealth and New South Wales government buildings flew at half mast, while condolence books were opened.
The scene of the drama, Martin Place, is Sydney's financial centre and houses several prominent buildings, including the New South Wales parliament, the US consulate, the country's central bank and the Commonwealth Bank of Australia.
- Hostages forced to make videos -
Channel Seven reporter Chris Reason, whose office is opposite the cafe, said a call came from police communications that there was a "hostage down", prompting officers to storm the building without warning.
An AFP photographer saw one body carried out.
A city hospital said it had admitted a 39-year-old policeman with a gunshot graze to his cheek, a woman in her 40s in a serious but stable condition with a gunshot wound to her leg, and a woman suffering from back pain.
A bomb robot was sent into the building as police declared the siege over and medics tended to hostages but no explosives were found.
Reports said the gunman forced hostages to make videos with demands during the standoff.
In two videos, they said he would release five of them if Abbott called him, the Australian Broadcasting Corporation said.
He also wanted an Islamic State flag sent to him and said there were four bombs around the city, a claim proven to be false.
The preChristmas siege of the Lindt chocolate cafe began Monday morning and triggered a massive security lockdown in the bustling financial district as hundreds of police surrounded the site.
- Gunman 'damaged goods' -
Monis's former lawyer Manny Conditsis said the public could be assured that it was not the work of an organised terrorist group.
"It's not a concerted terrorism event or act. It's a damagedgoods individual who's done something outrageous," he said of a man who arrived in Australia as a refugee in 1996.
Tehran swiftly condemned the Iranian-born extremist.
"Undertaking such inhuman acts and provoking fear and panic in the name of merciful Islam is not in any way justifiable," foreign ministry spokeswoman Marzieh Afkham said, according to IRNA news agency.
Australia has been on high alert in recent months with the government raising concerns that citizens who have fought alongside Sunni jihadists in Iraq and Syria could return home radicalised and carry out "lone wolf" attacks.
The government in September raised its terror threat level and police conducted largescale counterterror raids across the country. Only two people were charged.
More than 70 Australians are believed to be fighting for Islamic militants in Iraq and Syria. At least 20 have died.