The Muslim faith has nothing to do with the terrorism France faced after a crazed gunman went on a series of shooting sprees, killing seven people, Nicolas Sarkozy has said.

Speaking just hours after it was confirmed that gunman Mohammed Merah had been killed in a gun battle following a 32-hour siege in Toulouse, the French president called for calm.

"The Islamic faith has nothing to do with the insane motivations of this man. Before deciding to target Jewish children he targeted other Muslims."

He added: "We cannot allow this kind of ideology of hate or terrorism to take over our country."

"France has shown their indignation and they did not allow their anger to take over," he said.

Merah was accused of killing three Muslim soldiers and four Jews, including three children, in separate incidents in the south west of France. The 23-year-old, who is of Algerian extraction, was said to be acting 'in revenge for Palestinian children' and has claimed to belong to a fringe group related to al-Qaeda.

The suspected gun man died on Thursday morning after a stand-off with police. France's interior minister Claude Gueant gave an extraordinary account of the raid, telling reporters that police found Merah hiding in the bathroom and that he started "shooting wildly" at police before leaping out of the window.

Sarkozy said they would now look into whether Merah was working with others.

"We will not allow this kind of ideology to affect us. I have spoke to the prime minister and other ministers, we've had a discussion about this.

"All those people who decide to visit internet sites that apologise or defend this kind of violence or terrorism, all those who go away to work and be indoctrinated in countries with this kind of ideology will also be punished. We will not allow people to refer to this kind of ideological thinking and they will be punished by the law," he said.

The French president said every step had been taken to ensure Merah was caught alive but "that was not possible."

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Reuters had quoted the director of prisons in Khandahar, Afghanistan, who said Merah was arrested in 2007 but escaped en masse with other Taliban prisoners in 2008.

It was also reported that Merah had previously attempted to join the French military but was turned down because of his alleged criminal record.

Paris prosecutor François Molins said that Merah was obsessed with watching graphic videos of beheadings and torture online, and said while he had trained at terrorist camps he did not have the "soul of a martyr" and was not prepared to die for his beliefs.

French commentator, Pierre Haski told the BBC's Newshour programme that "the mystery here is that he was found to have quite a good arsenal of weapons, war weapons, and given that he was under surveillance it's not clear how this could have escaped the attention of the authorities."