Deadly knife rampage in Melbourne 'treated as terror'

Australian police have launched a terror investigation after a knife-wielding man killed one person and injured two others on a busy street.

Police shot dead the attacker during his rampage in a Melbourne shopping district around 4.20pm on Friday.

The man crashed a pick-up truck packed with gas cylinders, which burst into flames, before confronting members of the public and police with a knife.

Video footage circulating on social media showed the individual in question, a man of Somali origin, repeatedly lashing out at officers confronting him.

Police were armed with tasers, but video showed the man fall to the ground as he was shot in the chest - injuries from which he later died in hospital.

So-called Islamic State have since claimed responsibility for the attack.

The incident took place on Bourke Street, a busy shopping street in central Melbourne.

A number of people managed to take videos of the attack, which showed a victim lying on the ground, the car burning and the assailant confronting police before being shot.

During the attack, the man could be seen taking several swings at one of the officers.

Two people, apparently members of public - one with a shopping trolley - could be seen attempting to stop him.

The attacker fatally stabbed one person and left two others injured. Credit: Eurovision

Victoria Police Chief Commissioner Graham Ashton said the suspect was known to authorities.

"We are treating this as a terrorism incident," he told a press conference in Melbourne.

"He is known to both Victoria Police and federal intelligence authorities. There is no ongoing threat that we are aware of in relation to that individual.

"Having said that this is an ongoing investigation."

The police commissioner said there were gas bottles found in the car, which was on fire, and the bomb squad was called in.

Police cordoned off the street in Melbourne, Australia. Credit: APTN

Immediately after the incident, Superintendent David Clayton said: "Nearby police quickly responded to the incident.

"As they got out of the car they were confronted by a male brandishing a knife and threatening them.

"At the same time passers-by were calling out that members of the public had been stabbed."

He added: "Three people have been stabbed. Unfortunately one is deceased at the scene. Two other victims are currently in hospital."

Investigators say they are treating the incident as terror. Credit: APTN

Prime Minister Scott Morrison condemned the "evil and cowardly attack."

"Australians will never be intimidated by these appalling attacks and we will continue to go about our lives and enjoy the freedoms that the terrorists detest," he said in a statement.

Victoria Premier Daniel Andrews also condemned the "evil" act.

"This is an evil and terrifying thing that has happened in our city and state today and we condemn it," he said.

The premier added: "We will not be defined by this act of evil. We will simply refuse to do that."