One dead in stabbing rampage in Melbourne

The dramatic scene was captured by Twitter user @chrismacheras

The dramatic scene was captured by Twitter user @chrismacheras

One of the officers then shot the man and he collapsed to the ground clutching his chest, the video showed.

Officials are treating the incident that brought Melbourne to a standstill during Friday afternoon rush hour as terrorism-related. The reason for the attack has yet to be confirmed.

-- 7:30 p.m. Police shot a knife-wielding man Friday after he fatally stabbed one person and injured two others in the centre of Australia's second-largest city, police said.

When police arrived, the man punched one of the officers through their patrol auto window, Ashton told reporters Friday.

The suspect was shot by police and died from gunshot wounds in the Alfred Hospital.

The counter-terrorism command has taken a lead role in the investigation and police have set up a three-block-wide exclusion zone.

"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".

Earlier, paramedics said they assessed three people at the scene.

When asked if police should have shot Shire Ali in the leg rather than the chest, Commissioner Ashton said police were trained to kill if they believed their life or a member of the public's life was at risk.

"It looks like he's attempted to ignite a fire in the auto, we believe at this stage with a view to igniting those canisters with some sort of explosion, but that didn't eventuate", Commissioner Ashton says.

Friday's attack is a double blow for the city as it coincides with an ongoing murder trial of 28-year-old James Gargasoulas, who ploughed his vehicle into crowds in the same area in 2017, killing six people. He died in hospital.

Markel said bystanders were yelling out "just shoot him, just shoot him", while police officers were trying to disarm the attacker.

A bystander in Bourke St said that a vehicle had burst into flames. Police are asking for members of the public to avoid the area.

Twitter user Meegan May wrote: "Guy seems to have set his vehicle on fire, then attacked police with a knife".

"The one who executed the ramming and stabbing operation in Melbourne (.) is one of the fighters of the Islamic State and he executed the operation in response to (a call) to target the citizens of the coalition", the ISIS news website Amaq said on Friday, according to news.com.au.

The apparent attack came as a 28-year-old James Gargasoulas underwent trial in Melbourne for driving into a crowd in the same area in 2017, killing six people.

Victoria's premier, Daniel Andrews, praised the police and bystanders who rushed to help "complete strangers".

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