A 42-year-old man has been arrested and charged with terrorists acts after a shooting in the centre of Norway’s capital, Oslo.

Hours after the attack in which two people were killed and 21 injured, 10 seriously, the Norwegian security service raised the country’s terror alert level to the highest level.

The danger of a terrorist threat was “exceptionally” high, PST security service chief Roger Berg said.

Mr Berg said the shooting early on Saturday (local time), was considered an Islamist-motivated terrorist attack.

The victims were shot in and outside the London Pub, a popular LGBTQ+ venue, and near the Herr Nilsen jazz club and another pub in central Oslo on the eve of the city’s Pride parade. Eyewitnesses said the suspect took out a gun from his bag and started firing, while terrified people nearby threw themselves to the ground or fled.

“We are now contributing all the relevant information we have to the Oslo police district and are working to clarify whether more acts of violence may be planned. We do not currently have any indications of that,” the PST said in a tweet.

Norway’s terrorist alert level is now five, its highest possible level. Previously it was three.

The London Pub is a bar and nightclub that bills itself as Oslo’s “gay headquarters since 1979”. Shots were also fired at other nearby venues, in an area of the city known for its night-life.

Witnesses said they saw a man with a bag arrive at the scene, take out a gun and start shooting. Panic ensued.

Bystanders helped in the arrest of the suspect and police later thanked them for their efforts.

Of the 21 people injured, police said 10 were in serious condition. One man who died was in his 50s, the other in his 60s.

Police Inspector Tore Soldal said that the attacker was a Norwegian citizen of Iranian origin. They found a pistol and an assault rifle during a search of his flat. Both were unregistered.

Prosecutor Christian Hatlo said the man was “known to the police”, but had previously had only “minor convictions”. He has since been charged with “murder, attempted murder and terrorist acts”.

The suspect’s defence lawyer, John Christian Elden, told Norwegian broadcaster NRK it was too early to speak about a possible motivation and that the man’s mental health needed to be evaluated.

Large areas of Oslo’s party mile were cordoned off on Saturday as investigations continued.

The shooting came as people celebrated in the city centre late into the long summer night, ahead of the planned Pride parade. Bars, restaurants and other buildings were festooned with rainbow flags.

By Saturday night rainbow flags were flying across the city, including on government buildings and embassies.

Oslo Mayor Marianne Borgen had earlier said how much the city was looking forward to the event – to be held for the first time since the coronavirus pandemic erupted.

The parade, which would have been Oslo’s 40th Pride march, was cancelled on police advice. Nevertheless, several thousand shocked and grieving people marched along the planned route in the afternoon, according to Norwegian media.

Prime Minister Jonas Gahr Støre expressed his condolences to the victims, calling the shooting “a cruel and deeply shocking attack on innocent people”.

“Even though we do not know if the queer environment was the goal, the queer environment is regardless the victim,” he said.

“This day, June 25th, we were to celebrate love, we were to fill the streets in the colors of the rainbow, we were to showcase our community and our freedom. Instead, we are filled with grief.

“Let there be no doubt. We are a community, we are a diverse and strong community, and we will never be threatened or give up our values.”

Mr Støre said the perpetrator belonged “to an Islamist environment”.

“If this is Islamic terror, as PST points out, then many Muslims will feel vulnerable today and, in the time ahead. And I know that many Muslims in our country are also scared and in despair,” he said.

“It is our common responsibility to make it clear that no one other than the person or the people behind the attack is responsible for it.”

-with AAP