Tony Abbott says Sydney’s cafe siege “may well have been a preventable atrocity” amid growing public outcry over why the gunman was out on bail and not on terror watchlists.

“This has been a horrific wake-up call,” the prime minister said.

“And, yes, the tragedy is that this has happened.

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“This was an atrocity – it may well have been a preventable atrocity, and that’s why this swift and thorough review is so important.”

On Wednesday Mr Abbott said an urgent and wide-ranging review would examine how Man Haron Monis – the self-described cleric who was facing charges of being an accessory to the murder of his former wife – was granted asylum, citizenship and welfare benefits.

Monis was on bail over a raft of violent charges, including being an accessory to the murder of his ex-wife, when he took 17 people hostage inside a popular CBD cafe on Monday morning.

The siege ended 16 hours later with the death of barrister Katrina Dawson, shop manager Tori Johnson and Monis.

Monis, 50, had been on an ASIO watch list in 2008 when he sent offensive letters to the families of dead Australian soldiers, but dropped off the list.

“Just like about everyone else from the premier down, I was incredulous and exasperated at this,” Mr Abbott said.

“This guy has a long history of violence, a long history of mental instability, he has a long criminal record and obvious infatuation with extremism.

“It was extraordinary he was on our streets.”

The NSW premier has also expressed concern as to why Monis was walking the streets of Sydney.

“I’m as outraged as everyone else,” Mike Baird said.

NSW Attorney-General Brad Hazzard said earlier this week that Monis had slipped through the cracks of security and policing agencies.

However, he didn’t believe Monis would have been out on bail had the revamped bail act, due to start next month, been in place.

Under the new legislation, a person charged with being an accessory to murder would be forced to show cause as to why they should be granted bail.

“It is just unspeakably awful that these changes occurred too late for the victims of this monster,” Mr Abbott said.

On Thursday, Mr Hazzard expressed concern that a court has also given bail to Monis’s wife, Amirah Droudis.

He has also asked the DPP to review any cases where bail has been granted and where there may be any similarity to the circumstances of the Monis matter.