Australian police treating deadly knife attack as terrorism

A man has been shot by police after setting his auto on fire and stabbing several people in a mall in Melbourne's CBD this afternoon.

Clayton confirmed that police officers, clearly seen confronting a man in digital footage of the incident, are "okay".

One person has been stabbed to death on a central Melbourne street where a knife-wielding man was left in a critical condition after being shot by police.

He said: "Three people have been stabbed, unfortunately one of them is deceased at the scene".

Local media showed footage of a large man slashing wildly at police officers before being shot.

Police told people to stay away from the area.

Ashton didn't give the Somali attacker's name, but said the man had "family associations that are well known to us".

The other two are into the hospital including one suffering from a neck injury and is suspected to be in critical condition.

A man can be seen approaching two police officers with what appears to be a knife and attempts to stab them.

Police are treating it as a terrorist incident.

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Officers said they "are not looking for anyone further at this early stage".

Two members of the public came to the aid of police, one using a shopping trolley and another using a chair to try and stop the attacker.

Mr Ashton said security arrangements at Remembrance Day memorials and other public events scheduled over the weekend will be reassessed and it was likely police numbers there boosted.

The man has been arrested and is under police guard in hospital.

"He's known to police mainly in respect to relatives that he has which certainly are persons of interest to us, and he's someone that accordingly is know to both Victorian police and the Federal intelligence authorities", he said.

"This is an evil and terrifying thing that has happened", Victoria State Premier Daniel Andrews said alongside Ashton.

"I kept watching", said witness Tony Nguyen, after what he described as a "car bomb".

One witness told the Herald Sun that bystanders were calling to police, "shoot him, shoot him".

"Anyone with information or who witnessed the incident is asked to go to Melbourne West Police Station to make a statement", a police statement said.

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