Counter-terrorism police and the security services are running a record high of more than 700 live investigations, MPs have heard.
Assistant Commissioner Neil Basu told the Home Affairs Select Committee that around 80% of the inquiries related to Islamist plots, while the remainder included extreme right-wing conspiracies.
He said that his greatest concern remained “simple attacks on softer targets that are cheap to mount, easy to disguise and therefore harder to see and stop”.
Police and the security services have stopped 17 terror attacks since March last year – 13 Islamist and four extreme right-wing.
Mr Basu, who is head of counter-terror policing in the UK, said the attacks in London and Manchester last year marked a permanent shift in the threat to the country.
He told the committee: “Those attacks were not a temporary escalation of the threat, they are a sustained shift in that threat. The UK CT (counter-terrorism) machine to this day continues to run red hot.”
Calling for longer-term funding to be put in place for the fight against terrorism, he said the battle was “entirely” dependent on well-resourced local police forces.
“It is extremely difficult for CT policing when we are constantly working to short-term funding arrangements. A longer-term funding settlement would greatly assist.”
He said: “I would like to tell you that we are matched to the current threat, but the reality is we are not.
“We start from a position of strength: we have a national police, security service and government tripartite approach to countering terrorism honed over decades. It is world-class.
“But, matching the new threat requires new ways of working and for us to maintain our resources. We are working closely with the Home Office who have been supportive.”
Mr Basu described how “perverse” Islamist and right-wing ideologies were “feeding each other”.
He said that while the “overriding” threat to the UK was from Daesh – also known as Islamic State – and al-Qaida-inspired activity, the extreme far-right danger was growing.
Asked about Anjem Choudary, who was released from prison last week, Mr Basu refused to refer to the preacher by name.
The officer said: “Every minute that we spend having to look at somebody like that is a minute taken away from a priority operation. So it is not a great position to be in.”
Choudary was jailed in 2016 after he was convicted of inviting support for Islamic State.
In other comments, Mr Basu told the committee there was “no doubt” that the interaction between Border Force, security services, counter-terrorism and wider policing had to be “as tight as possible”.
He said: “Is it perfect? No it’s not. It needs work. It probably needs resourcing and there are a lot of reasons why that needs to improve rapidly.”
Referring to the case of Manchester bomber Salman Abedi, who had previously travelled to Libya, Mr Basu told the committee: “It was a matter of policy that he was not watchlisted when he went to Libya. That was a policy decision that was taken at the time.
“Whether or not that was the correct policy decision, it was a decision that was rationalised against that policy.”
The policy has since changed, the Assistant Commissioner added.