Australia's Jewish community went into official lockdown this week after a self-styled Iranian cleric held 20 people hostage in a 16-hour siege in Sydney.

A hail of gunfire erupted as counter-terror agents stormed the Lindt café in Martin Place at about 2am on Tuesday following the escape of several hostages from the building.

Two hostages were killed in the firefight, as well as the gunman, Man Maron Monis, 50, who was out on bail for being an accessory to the murder of his ex-wife.

He was also facing more than 50 sexual and indecent assault charges, and was convicted for sending abusive letters to families of deceased Australian soldiers, including one Jewish family.

In 2009, Monis wrote to the family of Greg Sher: "A Jewish man who kills innocent Muslim civilians is not a pig, he is a thousand times worse."

On Monday, the Community Security Group elevated the threat level as a result of the crisis.

"Jewish institutions across Australia are in lockdown, excursions have been cancelled and tight security measures are in place," said a senior Jewish official who declined to be named.

At least one major Jewish institution in Sydney issued a "code red" alert; the building was sealed with no one allowed to enter or exit for several hours before the alert was lifted. On Tuesday, there was still an exclusion zone around Lindt café, which was surrounded by a sea of floral tributes to the two victims, barrister Katrina Dawson and café manager Tori Johnson.

Amid the flowers was one small menorah placed by Levi Wolff, the rabbi of Sydney's largest synagogue. "The Jewish community of Australia expresses our deepest sympathy for the families of the Martin Place tragedy," read the message. "May the light of the Festival of Chanucah bring comfort and warmth to our nation."

"It was deeply moving and very emotional," he said later. "People of all races, colours and religions came together and are deeply committed not to allow it to dampen the Australian spirit of mateship and friendship."

On Tuesday night, just two blocks from the crime scene, Rabbi Wolff led a memorial followed by a public Chanucah-lighting ceremony at a Westfield mall in downtown Sydney.

"We hope the positive energy we are bringing into this room will help bring light, warmth and comfort to a nation that has never experienced darkness on levels like this before," he said.

On Thursday night, a public menorah was due to be lit in Martin Place, as it has been for more than two decades.

Rabbi Elimelech Levy, from Chabad Youth of New South Wales, said: "We haven't cancelled it - we are waiting to hear back from authorities. We'd like it to go ahead, and to pay tribute to the victims of terror."

● A teenager who boarded a bus carrying Jewish school children in Sydney shouting "kill the Jews" and "Heil Hitler" has been ordered to attend a Shabbat dinner and visit a Jewish museum.

The boy, who is a minor, was arrested after the incident. He will participate in a harmony programme run by the New South Wales Jewish Board of Deputies.