We misinformed PM over Sydney gunman's firearm licence: Police

The Australian Federal Police (AFP) have conceded that they misinformed Prime Minister Tony Abbott about whether Sydney siege gunman Man Haron Monis held a firearms licence.

There has been confusion in the aftermath of Monis's attack, which ended in the early hours of Tuesday morning with three people dead, including the lone gunman, after a tense 16-hour standoff with police inside a cafe in Sydney's central business district, where Monis was holding 17 people hostage.

Addressing the media Wednesday afternoon, Abbott revealed that Monis was in possession of a gun licence prior to taking the hostages.

However, he was later forced to clarify his comments after New South Wales (NSW) Police responded by insisting there was "no record of the 50-year-old ever holding one".

Within four hours of Abbott's press conference, the AFP announced it would hold an independent inquiry as to why the prime minister was briefed that Monis was in possession of a valid firearms licence.

The AFP Thursday claimed it used a "non-definitive" database, known to law enforcement agencies, to check the Iranian cleric's licence record, Xinhua reported.

In a statement released Thursday, the AFP said: "The information provided at the time was based on a manual entry in the National Police Reference System (NPRS) in the category of 'Firearms Licence Holder'."

"The NPRS is a consolidation of person of interest information provided by all police agencies, which is managed by CrimTrac on their behalf.

"It enables policing jurisdictions to share their information and integrate with their local police systems. It supports police and other law enforcement agencies by providing key reference data to support first responders, investigators and analysts," it stated.

A 2009 agreement between the AFP and CrimTrac clearly states: "It is acknowledged by all parties that information contained in the NPRS cannot be considered to be definitive in nature."

The AFP also revealed it was now working to alleviate problems relating to the system.

"The AFP has been working closely with CrimTrac, federal and state partners to establish the source of the entry and to identify any shortfalls within the current system," it said Thursday.

Abbott had announced an "urgent review" after attracting scrutiny for claiming Monis was in possession of a firearm licence and demanded to know the reasons why.

"Plainly there are questions to be asked when someone with such a history of infatuation with extremism, violent crime and mental instability should be in possession of a gun licence," Abbott had said Wednesday afternoon.

"We have very tough gun laws and I guess we can be pleased that he didn't have a more potent weapon at his disposal. But why did he have a gun licence in the first place? That's the relevant question here."