The man killed during a Canadian police raid at his home in Ontario on Wednesday was a supporter of Islamic State who was in the final stages of preparing an attack on a Canadian city with a homemade bomb, police said on Thursday.

Police went to the home of Aaron Driver in the small town of Strathroy after receiving credible information, including a "martyrdom video," from U.S. authorities that he planned what could have been a "dreadful" attack, the Royal Canadian Mounted Police (RCMP) said at a news conference.

Driver died after he detonated an explosive device in the backseat of a taxi as police closed in and opened fire, the RCMP said in Ottawa. A representative from a local taxi company said a cab had been dispatched to Driver's address at the time of the police raid and the taxi driver sustained minor injuries.

It was a race against time," said RCMP Deputy Commissioner Mike Cabana, noting the outcome "could have been significantly more dreadful" if police had not intervened when they did.

The incident was the first security test for Prime Minister Justin Trudeau, who was elected last October and who in February fulfilled a campaign pledge to withdraw Canada from the combat mission against Islamic State and to increase its mission training local fighters against the group in northern Iraq.

The video provided by the U.S. Federal Bureau of Investigation allowed the RCMP to identify Driver and go to his home in Strathroy, about 225 km (140 miles) southwest of Toronto. In Washington, the FBI said it gave the RCMP "actionable threat intelligence".

In the video, a man in a black balaclava cites a phrase from the Koran, refers to crimes against Muslims and pledges an imminent attack on a Canadian city.

"Oh Canada, you received many warnings, you were told many times what would become of those who fight against the Islamic State," the man says in the video, pledging allegiance to the militant group.

Police said the attack was planned for the next 72 hours, during rush hour. The RCMP said there was no indication that Driver, a 24-year-old Muslim convert, had any accomplices and did not specify which city was targeted.

Islamic State media said Driver was its "soldier," the SITE Intelligence Group monitoring service said on Thursday.

Driver, who also used the alias Harun Abdurahman, was arrested but never charged with a crime last year for openly supporting the militant Islamist group Islamic State on social media.

In February he was placed on a peace bond, a court order that restricted his movements, required that he stay away from social media and computers and not have contact with Islamic State or similar groups.

Police said on Thursday that Driver had not been under constant surveillance, but had been supervised.

Canadian Public Safety Minister Ralph Goodale said that in some circumstances peace bonds may not be the most effective tool.

"Those issues will obviously need to be very carefully scrutinized," he told CBC television.

Strathroy is a town of about 21,000 inhabitants in the heart of Ontario's farmland. Driver's house was on a tranquil street lined with detached two-storey homes, near a baseball field and a swimming pool.

WARNING TO TRANSIT OPERATORS

Public transit operators in Toronto and the surrounding area were warned by police of potential security threats hours before Driver died, they said on Thursday.

Aaron Driver was a troubled child who converted to Islam in his teens some time before his support for Islamic State attracted the attention of Canadian police.

"I didn't realise he was so radicalised," Driver's father, Wayne Driver, told the CBC. "I didn't know he could speak Arabic so well. I knew he was mad at the world because of his mother dying but I didn't realise he was turning his hatred outward to the world."

In 2014, Canada was stunned by two deadly attacks that police said were the work of homegrown radicals and that led to tougher new anti-terrorism measures. A gunman killed a soldier at Ottawa's national war memorial before launching an attack on the Canadian Parliament in October 2014 while, in the same week, a man ran down two soldiers in Quebec, killing one.