The radicals stood in front of posters declaring 'the dawn of a new era has begun' in reference to the so-called caliphate and their literature praised allegedly the 'sacrifices' made in the Middle East.
Scotland Yard has said it is investigating whether the men were breaking terror laws.
Pictures of the men and their leaflets have spread across social media.
The literature claims the 'glad tidings' that 'Muslims with the help of Allah have announced the re-establishment of the Khilafah and appointed an imam as a Khaleef .'
One Muslim woman who confronted the men, believed to be from Luton and linked to hate preachers Anjem Choudary and Omar Bakri, said she was racially abused.
Asmaa Al-kufaishi, tweeted: 'This group are promoting ISIL on Oxford Street. Racially abused us when we spoke out. They don’t know Islam.'
'Promoting death of innocent people, telling me to die because of my faith and race and insulting me is not Islamic behavior.'
ISIL extremists - who include hundreds of Britain - have carried out such acts of such extreme brutality that Al-Qaeda has severed all links with them.
NTJ/NJF