Australian Prime Minister Tony Abbott on Thursday admitted Sydney’s cafe siege was "a horrific wake-up call" as details emerged of the final minutes of the standoff which left the gunman and two hostages dead.

Australian Prime Minister Tony Abbott on Thursday admitted Sydney's cafe siege was "a horrific wake-up call" as details emerged of the final minutes of the standoff which left the gunman and two hostages dead.

Abbott has ordered an urgent inquiry into the circumstances surrounding the tragedy and why deranged self-styled extremist cleric Man Haron Monis was not under surveillance given his history of extremism and violence.

The 50-year-old man was on bail for a string of charges, including sexual offences and abetting the murder of his ex-wife.

"This has been a horrific wake-up call," Abbott told Macquarie Radio when asked if this was an incident waiting to happen, amid criticism that various authorities failed to act to take Monis off the streets.

"The tragedy is that this has happened. I mean, this was an atrocity, it may well have been a preventable atrocity, and that's why this swift and thorough review is so important," he said.

Monis, who was well known to authorities but was not on any counter-terror watchlists, took 17 people hostage at a cafe in the heart of Sydney on Monday, unfurling an Islamic flag during a 16-hour siege.

He was killed along with two victims -- the cafe's manager, 34, and a 38-year-old mother-of-three -- in a bloody end to the standoff.

Iran said on Wednesday it had repeatedly warned Australia about the criminal past called for him to be kept under surveillance, but Australia ignored the guidance sent.