Horror over a deadly siege morphed into anger yesterday as leaders of a grieving nation demanded to know how a man with a violent criminal history slipped through the cracks and ended up in the downtown Sydney cafe where he took 17 people hostage.

The 16-hour siege ended in a barrage of gunfire and screams early yesterday morning when police stormed into the Lindt Chocolat Cafe in a desperate bid to free the hostages. Two of the hostages were killed, as was the gunman, Man Haron Monis, a 50-year-old Iranian-born, self-styled cleric described by Australia's prime minister as a deeply disturbed person carrying out a "sick fantasy."

"How can someone who has had such a long and checkered history not be on the appropriate watch list? And how can someone like that be entirely at large in the community?" Prime Minister Tony Abbott asked at a news conference. "These are questions we need to look at carefully and calmly and methodically. That's what we'll be doing in the days and weeks ahead."

Monis was convicted and sentenced last year to 300 hours of community service for sending what a judge called "grossly offensive" letters to families of soldiers killed in Afghanistan between 2007 and 2009. He later was charged with being an accessory to the murder of his ex-wife. Earlier this year, he was charged with the 2002 sexual assault of a woman. He had been out on bail on all the charges.

That history prompted a flurry of questions that remained unanswered more than a day after the siege began on Monday morning. Why was Monis out on bail? Why was he not on a terror watch list? How did he get a shotgun in a country with tough gun ownership laws?

"We are all outraged that this guy was on the street," New South Wales Premier Mike Baird said. "We need to ensure that everything is done to learn from this."

Alongside the fury and confusion was an outpouring of grief, as crowds of tearful mourners flocked to Martin Place, a plaza in the heart of Sydney's financial and shopping district where the Lindt cafe is located. The mourners left mountains of flowers in honor of the two hostages who were killed: Katrina Dawson, a 38-year-old lawyer and mother of three, and Tori Johnson, the cafe's 34-year-old manager. Officials have yet to say whether the two died in crossfire as police stormed in or were shot by their captor.

"I'll never forget this day as long as I live," said Jenny Borovina, who was in tears with two friends while carrying white flowers to the site. She predicted that the standoff would leave a permanent scar on Australia's psyche: "Our laid-back nature has just changed."

Prime Minister Abbott joined the outpouring of national mourning and laid a bouquet, calling the spontaneous shrine "an expression of the innate goodness and decency which is a mark of Australian character."

At an emotional memorial service attended by hundreds, Johnson was lauded for sacrificing his life and helping to bring the siege to an end by grabbing the gunman's shotgun.

"Apparently seeing an opportunity, Tori grabbed the gun," Sydney's Catholic Archbishop Anthony Fisher said at the service. "Tragically, it went off, killing him. But it triggered the response of police and eventual freedom for most of the hostages."

The siege began when Monis walked into the cafe during Monday morning rush hour, trapping 17 customers and staffers inside. He had some of the hostages record videos of themselves reciting his demands: to be delivered a flag of the Islamic State group and to speak directly with Abbott. He also forced some to hold a flag with an Islamic declaration of faith above the shop window's festive inscription of "Merry Christmas."

The siege heightened fears of a terror attack, but it also produced heart-rending displays of solidarity among Australians who reached out to their Muslim compatriots. Many offered on Twitter to accompany people dressed in Muslim clothes who were afraid of a backlash against the country's Muslim minority of 500,000 in a nation of 24 million. The hashtag #IllRideWithYou - or I'll Ride With You - was used more than 100,000 times by early yesterday.

New South Wales Attorney General Brad Hazzard said he had asked state and federal agencies to look into how Monis evaded authorities' notice for so long.

"How did this offender not come to the attention of state and federal agencies for more urgent action?" he said.

New South Wales courts have become more likely to release defendants awaiting trial on bail rather than hold them in custody in part to reduce prisoner numbers in Australia's most populous state.

The standoff ended at around 4am yesterday NZT when heavily armed police stormed into the cafe after hearing gunfire inside, said New South Wales police Commissioner Andrew Scipione.

"They made the call because they believed that at that time, if they didn't enter, there would have been many more lives lost," Scipione said.

A loud bang rang out, several hostages ran from the building, and police swooped in amid heavy gunfire, shouts and flashes.

Four people were injured, including three women who were hospitalized in stable condition after being treated for gunshot wounds, and a police officer who was released from the hospital after being treated for shotgun pellet wounds, said Deputy Police Commissioner Catherine Burn. Two other hostages, both pregnant women, were assessed by doctors as a precaution and were in stable condition, police said.