A 19-year-old man was arrested after the attack on the woman, who was in her 60s and who died from her injuries at the scene.

"Early indications suggest that mental health is a significant factor in this case and that is one major line of inquiry," London Metropolitan Police Assistant Commissioner Mark Rowley told reporters, according to Reuters.

"But of course at this stage we should keep an open mind regarding motive and consequently terrorism as a motivation remains but one line of inquiry for us to explore."

Officers used a Taser to subdue the assailant who was arrested at 11.39pm, the police said.

The police's homicide department is investigating the knife attack but supported by counter-terrorism unit, police said.

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"Additional police units have been deployed to the area to provide reassurance," police said.

BBC Radio London broadcast a conversation with a caller named Paul, who said he came across the scene of the stabbing as he left the Bloomsbury cinema, just off Russell Square.

"We came around the corner and there were armed police everywhere … a massive police presence … and a corpse lying in the street covered in a blanket.

Russell Square is near Tavistock Square, one of the locations of the bombings on July 7, 2005 that killed 52 people in London.

Europe remains on edge over street violence in recent months. A man in Ansbach, Germany detonated a bomb killing himself and injuring others.

In Nice, France, a man ploughed a heavy truck into a crowd killing 84 people on July 14.

Both men were later found to have pledged allegiance to Islamic State.

Fairfax Media with Megan Levy, Reuters