Three British men have gone on trial, charged with an alleged Islamic State-inspired plot to launch a knife attack.

Nadir Sayed, 22, his 20-year-old cousin Yousaf Syed and 28-year-old Haseeb Hamayoon were arrested in November, three days before the national war commemorations of Remembrance Sunday. The three men deny planning acts of terrorism.

Prosecutor Max Hill told a jury at Woolwich Crown Court Monday that the men were responding to a decree by the Islamic State militant group calling on supporters to attack "disbelieving" Westerners with bombs, guns, knives, cars or any other weapons at hand.

Hill said the men had pictures on their phones of Michael Adebowale and Michael Adebolajo, who ran over and hacked to death British soldier Lee Rigby on a London street in 2013.