Australia terror attack leaves one dead, 2 injured in stabbing spree

1 killed 2 injured as knife-wielding attacker goes on rampage in central Melbourne

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One person was stabbed to death and two others wounded after they were attacked by a man in the centre of the Australian city of Melbourne on Friday.

Once at the scene police say the man who emerged from the vehicle attacked officers, before members of the public alerted them to several people who had been stabbed.

Police in Victoria have officially named the attacker behind the deadly stabbing in the Melborne CBD yesterday afternoon, identifying him as 31-year-old Mohamed Khalif, who was also known to go by the name of Hassan Shire.

Police said at the time they believed he was an Islamic State sympathiser and was planning an attack Melbourne's central Federation Square on New Year's Eve in 2017.

A major police incident has unfolded on Bourke Street, with one person confirmed dead and a knife-wielding man shot by police.

This image made from video shows police cordon in Melbourne, Australia.

Police warned people to avoid the area and created a three-block-wide exclusion zone as the bomb squad was dispatched to secure the area and examine the vehicle after the fire was extinguished.

Prime Minister Scott Morrison said "radical, violent, extremist Islam" poses the greatest threat to Australia's national security.

"People around me screamed that he had a knife but I couldn't see clearly from where I was", Meegan May said.

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"He is certainly someone who is known to both us and the federal authorities in relation to counter-terrorism and terrorism-related matters", he told Channel 7's Sunrise program.

Police warned people to avoid the area and dispatched the bomb squad to secure the area and examine the burning vehicle. Police are not looking for anyone further at this early stage.

Police were responding to reports a vehicle was on fire.

People also told local media that they saw police trying to calm down the attacker.

Police officers who apprehended the suspect are being treated for cuts and scrapes and are not thought to be in a serious condition.

Victoris Premier Daniel Andrews described Friday's attack as "evil" but said the city would not be bowed.

The suspect is seen confronting the two police officers before one of them shoots him.

The attack occurred during rush hour on Bourke Street and, according to witnesses, sent people running and screaming "he's got a knife".

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