David Cameron has warned Britain will have to be "particularly vigilant" after US special forces killed Osama Bin Laden in Pakistan.
The prime minister congratulated those behind "this brave action" which saw the al-Qaida leader killed nearly ten years after the September 11th terrorist atrocities of 2001.
But he warned that extremism would not disappear as a result of one man's death.
"This news will be welcomed right across our country," Mr Cameron said.
"Of course it does not mark the end of the threat we face from extremist terror. Indeed, we'll have to be particularly vigilant in the weeks ahead, but it is, I believe, a massive step forward."
Shadow foreign secretary Douglas Alexander said the people of Britain would 'welcome' the news, but added a similar note of caution.
"This is a major blow against al-Qaida which will give a sense of justice to the families of Bin Laden's victims but, while this is an important chapter, it is not the end of this story and we have to show continuing vigilance and determination in the face of this threat," he said.
Deputy prime minister Nick Clegg said: "We will all need to continue to be as vigilant as ever in the fight against terrorism.
"At this time our thoughts go out to all of those in the UK and other countries who have suffered, directly and indirectly, from the violence that Bin Laden inflicted on the world."
British embassies around the world have been ordered by foreign secretary Douglas Alexander to review their security arrangements in the wake of today's news.
US president Barack Obama announced Bin Laden's killing in an unusually late broadcast. He explained how the raid had been meticulously prepared over eight months - and how it had gone smoothly, with no civilians killed.
"For over two decades, bin Laden has been al-Qaida's leader and symbol, and has continued to plot attacks against our country and our friends and allies," Mr Obama said.
"The death of bin Laden marks the most significant achievement to date in our nation's effort to defeat al-Qaida."
Crowds gathered outside the White House chanting 'USA', but US officials were bracing for reprisal attacks too.
Bookmakers William Hill cut the odds of Mr Obama's re-election from 4/5 to 2/5 favourite, with Republican Mitt Romney second favourite at 8/1.
The president shied away from taking personal credit for the operation in his televised address to the nation, but pointed out that "shortly after taking office" he had ordered the CIA's director "to make the killing or capture of bin Laden the top priority of our war against al-Qaida".