Police stopped a car containing three men in an operation by the Specialist Crime Directorate and SO19, the firearms unit, on Saturday night.

Officers saw that one of the men was armed and shot him. It is not known if they shouted a warning to drop the weapon.

Two men were arrested and taken to a Central London police station.

Yesterday the area was sealed off and the incident was being investigated by the Independent Police Complaints Commission (IPCC). Forensic science officers examined a car, thought to be a VW Golf, which was taken away.

Simon Milner, 40, the manager of a pub near by, said: “It was about 7.30pm when I heard half a dozen loud bangs. At first I thought they were fireworks because Chelsea had just won the title.

“I saw people running for their lives. There were two kids out there, terrified. They were screaming. I saw about half a dozen armed policemen on Hale Lane. I saw police drag three guys out of a car. One was lying on the pavement; there were two officers trying to resuscitate him, for 10 or 15 minutes.”

Mr Milner said that police asked him to make sure his customers stayed in the pub. He said: “They took everyone’s details and also took photos.”

Chris Webber, another witness, said: “I heard noises that sounded like firecrackers. I saw police surrounding a car. One of them fired shots into the car.”

The IPCC said that three firearms had been recovered from the car. The dead man had not been formally identified last night.

Ian Bynoe, of the commission, said: “The IPCC will investigate the circumstances leading to the use of armed officers, together with the justification for shots to be fired.”

Elsewhere in London, police were called to a shooting in Wood Green on Saturday night. The victim, 22, was taken to hospital but died. It is thought that five or six youths surrounded a silver car that he was in and shot him. A third man was shot in a Wimbledon nightclub early yesterday. Police arrested two men, aged 28 and 19. The victim, 21, was in a serious condition in hospital.

Near Leicester Square a man in his twenties was savagely attacked by a gang early yesterday. He was pronounced dead on arrival at hospital. A number of people were arrested.

• Police thwarted a suspected attempt by May Day activists to disrupt a Tesco supermarket in East London yesterday. About 80 people, in two groups, some of them in masks, marched towards the shop in Hackney, but officers dispersed the crowds before any major disruption.

  A third group had gathered in the shop, police said. Ten people were arrested, most for public order offences.

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