The review will examine whether the law gives enough support to officers making a "split- second" decision to shoot in the wake of the Paris attacks last month that killed 129 people.
It follows concerns from senior police that firearms officers in Britain do not have the necessary legal or political backing to work with confidence in the instance of a similar attack in the UK.
Currently, the UK's Criminal Law Act 1967 allows police to use "reasonable force", while theCriminal Justice Act 2008 recognises the defence that an officer had an "honest and instinctive" belief that opening fire was reasonable.
The internal review, to be carried out by the UK Home Office, the Attorney General's office and the Ministry of Justice, is expected to examine whether those laws go far enough to protect armed officers and prevent them hesitating in the event of an attack.
"We must make sure that when police take the ultimate decision to protect the safety of the public they do so with the full support of the law and the state - there can be no room for hesitation when lives are at risk.