David Cameron has ordered an intelligence review after it emerged that the two men who allegedly hacked a soldier to death on a London street were previously known to MI5.
Meanwhile, security at military bases has been stepped up as police made more arrests in their investigation of the shocking attack.
The Metropolitan Police Force have freed without charges a 31-year-old woman and a 29-year-old woman who were arrested on suspicion of conspiracy to murder.
Another suspect, a 29-year-old man, remains in custody.
The two suspects that were arrested at the time of the attack have been identified in the media as Michael Adebolajo, 28, and Michael Adebowale, 22. They remain under armed guard in hospital after being shot by police at the scene of the attack.
Mr Adebolajo, born in South London and of Nigerian descent, had a history of associating with extremist groups, and was a regular fixture on the streets of Woolwich handing out radical Islamist pamphlets.
Several media reported he was once intercepted by police attempting to travel to Somalia to fight alongside the al-Qaeda splinter group al-Shabaab.
He is allegedly the man filmed by a witness wielding a meat cleaver and telling onlookers that as long as British troops were in Muslim countries ''you people will never be safe''.
Both men had featured in investigations by MI5, the domestic security service, MI6 and police over eight years, but they were not considered key figures and so not closely monitored. Mr Cameron said there would be a review by the parliamentary intelligence and security committee of what MI5 and police knew about the men, which is expected to examine whether there were red flags that were overlooked.
''It is natural that questions will be asked,'' Mr Cameron said, but he warned against knee-jerk responses.
Counter-terrorism police yesterday revealed they had arrested a 29-year-old man and a 29-year-old woman on suspicion of conspiracy to murder, in connection with the Woolwich attack.
They searched five homes, mostly in London, in what they said was ''a large, complex and fast-moving investigation'' involving many lines of inquiry.
They also spent Thursday searching the crime scene and collecting pictures, videos and statements from the bystanders who witnessed the attack.
The attack was initially assessed as a ''lone wolf'' action by the two men, but the new arrests suggest counter-terrorism police are investigating whether they were part of a wider network or group.
Intelligence services are also trying to ascertain whether they had any connections to foreign or domestic terrorist groups.
At Thursday's meeting of the government's emergency ''Cobra'' committee, security chiefs warned that the widely reported murder could be followed by copycat attacks, The Times reported.
Security was tightened at military bases and barracks around the country, and more than a thousand extra police deployed on the streets of London.
The attack has also revived calls to pass the so-called ''snoopers' charter'' - the proposed communications data bill that would extend the ability of the security services to track email and internet use.
But the Ministry of Defence relaxed a ban on personnel wearing their uniforms when off base in London. ''The best way we can defeat terrorism is to carry on as normal,'' a spokesman said.
The department released the name of the victim of the Woolwich attack.
Drummer Lee Rigby, known as Riggers to his friends, was a 25-year-old father with a wife and a little boy.
He had seen action in Helmand province in Afghanistan, before moving to regimental headquarters in the Tower of London where he worked in recruitment.
''An extremely popular and witty soldier, Drummer Rigby was a larger than life personality within the Corps of Drums and was well known, liked and respected across the Second Fusiliers,'' the department's statement said.
''A loving father to his son Jack, aged two years, he will be sorely missed by all who knew him.''
Comrades paid tribute to him as a popular, witty character who was ''easily identified on parade by the huge smile on his face''.
The Rigby family paid tribute to a ''lovely'' man.
''He would do anything for anybody, he always looked after his sisters and always protected them. He took a 'big brother' role with everyone,'' they said in a statement.
''His family meant everything to him. He was a loving son, husband, father, brother, and uncle, and a friend to many.''