A mother confronted the Woolwich attackers, asking them to hand over their weapons and warning them: "It is only you versus many people, you are going to lose".
Ingrid Loyau-Kennett, 48, told the Daily Telegraph that one of the attackers said to her that they "want to start a war in London tonight".
The mother of two, a Cub Scout leader from Cornwall, added: "Being a Cub leader I have my first aid so when I saw this guy on the floor (since named as Drummer Lee Rigsby) I thought it was an accident - then I saw the guy was dead and I could not feel any pulse.
The man appeared to be holding a bloodied knife
"And then when I went up there was this black guy with a revolver and a kitchen knife, he had what looked like butcher's tools and he had a little axe, to cut the bones, and two large knives, and he said, 'Move off the body'.
"So I thought, 'OK, I don't know what is going on here', and he was covered with blood. I thought I had better start talking to him before he starts attacking somebody else. I thought these people usually have a message so I said, 'What do you want?'
"I asked him if he did it and he said yes, and I said, 'Why?' And he said because he has killed Muslim people in Muslim countries, he said he was a British solider and I said, 'Really?' And he said, 'I killed him because he killed Muslims and I am fed up with people killing Muslims in Afghanistan, they have nothing to do there'."
Mrs Loyau-Kennett said that the attacker seemed to be "in full control of his decisions and ready to do everything he wanted to do".
She added: "I said, 'Right now it is only you versus many people, you are going to lose, what would you like to do?' and he said, 'I would like to stay and fight'."
Ms Loyau-Kennett, of Helston in Cornwall, also told ITV's Daybreak she tried to reason with the killer in an effort to focus his attention away from other potential victims, as large crowds began to huddle at the scene.
She said: "I know it's big today but for me it was just a regular guy, just a bit upset. He was not on drugs, he was not drunk.
"He said, 'Don't touch, I killed him'. I said, 'Why?' He said: 'He's a British soldier. He killed people. He killed Muslim people in Muslim countries.'
Ms Loyau-Kennett said she was not scared
"And I said: okay. So what would you like? I tried to make him talk about how he felt. He said all the bombs dropping and blindly killing women, children...
"More and more people were starting to come. There were so many people around. I just looked around and I found it so daunting."
Asked if she was scared, the woman replied: "No - better me than a child.
"Unfortunately there were more and more mothers with children stopping around, so it was even more important I was talking to him and ask him what he wanted."
Other eyewitnesses described seeing the "crazed" Woolwich attackers "hacking" at their victim and posing for pictures before charging at police wielding meat cleavers.
One onlooker, identified as James, said he saw two black men chopping at a man in his 20s like he was "a piece of meat".
He told LBC radio: "They were hacking at this poor guy, literally.
"They were hacking at him, chopping him, cutting him."
Describing the murderers as "animals", he told how he saw them drag their victim from the pavement into the middle of the road.
"These two guys were crazed," he said as he fought back tears.
The witness added that they then stood around, waving knives and a gun, asking people nearby to take pictures of them "as if they wanted to be on TV or something".
He said they were running up and down the road, urging people to take pictures.
"In my opinion, they were waiting for the police to arrive to be shot by the police. That's the only thing I can think," he said.
When armed police arrived 20 minutes later, "the man with the beanie hat, the tall guy, he charged at the police vehicle," James said.
Another witness, Julia Wilders, 51, who lives near the scene, said she saw one of the attackers run towards police clutching two meat cleavers.
"He ran towards police before they could even get out of the car, and it looked like the other one was going to lift the gun up," she said.
"We were driving back and my husband said to me, 'Don't look, they're resuscitating someone'. But apparently they were stabbing him."
Her husband Graham, 50, said: "As I drove round I saw a man lying on the floor.
"It looked like another man was trying to resuscitate him, but then he pulled a handgun out in the air."
He said the person with the gun was a black man, wearing a black top, jeans and a hat.
Mr Wilders added: "I saw a bunch of schoolkids come up. I shouted at the teachers, 'Get the kids in school because there's someone there with a handgun'."
Mr Wilders told the BBC: "Apparently they actually ran the car into him and knocked him down before they did anything."
He then described how he saw one of the men pull out a handgun.
"It was a gun that looked as if it could take about 12, 15 rounds so I definitely know it was handgun because I actually seen it in his hand," he said.
"He didn't fire the gun. All I heard was four shots when the Trojan people turned up. These men actually went for the police with the machetes, knife and handgun.
"I don't think they cared. I don't think they really cared because they went for the police with a handgun. The police were the only ones who did any shooting."
Police at the scene of the machete attack on Wednesday
Witnesses also took to Twitter to describe the dramatic events and post photographs, which quickly spread online and on television news programmes.
One user, writing on the account @Boyadee, said he saw two men decapitate another man in front of him as he went to a nearby shop.
He suggested that the men looked like they were on drugs, waiting for the police to arrive and then going towards them with "just two machete and an old rusty lookin revolver".
"I couldn't believe my eyes. That was some movie s**t," he wrote.
"The two black bredas run this white guy over over then hop out the car and start chopping mans head off with machete."
He then described a female officer "taking out" one of the men "like Robocop".
Joe Tallant, 20, saw one man holding a gun and a knife, and another holding two knives.
He described how he saw the victim on the floor and the men asking onlookers to call the police.
He said: "I looked on the floor and I saw a dead body and then I saw one of the men walking around the body.
"He was telling people to call the police and then five to seven minutes later the police came.
"They walked towards the police car with their weapons and a police lady jumped out and shot them both."
He added: "They (the men) had the gun out and they were walking towards them casually with their arms by their side.
"I think there was a bit of twitching going on and then it all happened in a flash."
Mr Tallant also said one of the men insisted that "only women" should approach the victim.