Footage shows the dramatic moments on Thursday just before noon

The man, 23, escaped from a psychiatric ward a few weeks ago, police said

Three elderly women were injured by police bullets during the shooting

Two officers shot at a man wielding a knife at the Sydney shopping centre

NSW Police has defended the decision to open fire in Westfield Hornsby

Senior police officials have defended the decision made by two officers to open fire on a man wielding a knife and 'shouting Allahu Akbar' in a Sydney shopping centre on Thursday.

When officers shot Jerry Sourian, 23, three women aged between 60 and 80 were struck by bullets and fragments and rushed to a nearby hospital where they remain in stable conditions.

Police swooped on Westfield Hornsby in north-west Sydney after reports a man was behaving erratically and was armed with a large carving knife.

Sourian had escaped from a nearby psychiatric facility a few weeks ago, with police saying they were told he was missing on Wednesday.

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A man carrying a carving knife, 23, was shot by police at Westfield shopping centre in Hornsby, north-west Sydney after appearing to lunge at police (pictured)

But NSW Police has defended the officers behaviour, saying they were forced to confront a 'life or death' situation.

'In a life and death situation police had to make a very critical decision on the actions they took,' Assistant Commissioner Denis Clifford told reporters at the scene.

'It's alarming (that innocent bystanders were injured) but I wonder what may have happened had the police not intervened and stopped this person with a knife.'

It comes after a witness claims the man who had a carving knife at a shopping centre and was shot by police had earlier said 'Allahu Akbar'.

The woman was one of two police officers who shot at the man who was barefoot and carrying a knife

The term is Arabic for 'God is great' but has become associated Islamic State after extremists yelled 'Allahu Akbar' when committing terrorism.

Footage obtained by Nine News revealed police had asked Sourian to drop the knife before the man appeared to lunge at them. Two police officers then fired several shots.

The first words spoken by a female officer who fired shots was to one of the women injured, telling her: 'I'm sorry, I'm sorry.'

Paramedics are seen treating shooting victims at the scene on Thursday

Three women aged between 60 and 80 were also struck by police bullets. Blood is pictured on the ground after a woman was mistakenly shot

The three women, aged between 60 and 80, are in a stable condition in hospital, as is the 23-year-old man.

A man with the same name is licensed as a decorator and painter in Hornsby, Daily Mail Australia can reveal.

He was seen laying on the ground as bystanders rushed to the aid of the women caught in the wrong place at the wrong time.

Witnesses said the 23-year-old man was barefoot and appeared 'really depressed' before the shooting

Two officers who fired several shots at him when he appeared to lunge at them while carrying a carving knife

Police have confirmed the 23-year-old man did not injure anyone with the knife.

Just minutes after the shooting, the female officer who shot him was consoled by other police who put their arms around her.

Witness James Yeom, 35, owns the Gelatissimo store in front of the fountain where the shooting took place and said he saw a female officer shoot the man.

'Police were obviously asking for him to drop the knife and they did that several times and he did not react,' Mr Yeom, who called the police, told Daily Mail Australia.

Footage shows police asked the man to get down and drop his knife before they fired shots

'He looked like he was just standing and holding his knife and that's when they pulled out their guns and pointed them at him and asked him to drop the knife.

'He still didn't drop it... I had to step away a few steps so I didn't get shot.'

Mr Yeom said he thought 'the guy is probably on the floor' and returned to where he had been standing.

'I looked back and he [the man] was still running around. Instead there were innocent people on the floor and I thought 'something's not right',' he said.

Three women were injured by police officer. One of the officers who fired shots is pictured being comforted. She told one of the women injured: 'I'm sorry, I'm sorry'

The man was still running after police bullets mistakenly struck three women, witnesses said

'This female officer shot him and he went down and he dropped the knife.'

Mr Yeom said the officers did not put away their guns immediately and continued to point them at the man until they got closer to him and kicked the knife away before putting away their guns.

Assistant Commissioner Clifford said the officers fired a round each at the man who was wounded several times.

'Unfortunately some bystanders were also injured with either bullet or fragment wounds,' he said.

Bystanders watch on as two police shoot a 23-year-old man carrying a knife down at Westfield shopping centre in Hornsby, north-west Sydney

Blood is seen smeared on the tiles outside of the shopping centre as police tape cordons off the area

'Three ladies, aged between 60 and 80. All those people are being treated in various of hospitals in a stable condition.

'The person of interest is under police guard.'

The three women are in a stable condition and recovering in hospital.

Mr Clifford said the man was known to police and had fled from a psychiatric treatment centre a few weeks ago.

Forensic police look over the scene at Westfield Hornsby to gather evidence in the shooting

People were going about their day, having coffee or lunch, when the incident happened. Above is a forensic officer at the scene

He said tasers were believed to be available to the officers but they made a snap decision 'in a life and death situation'.

The man was 'babbling and incoherently ranting' outside the shopping centre before he approached police, according to reports.

Witnesses said he was 'barefoot' and appeared 'really depressed'.

Peter Clemenson tweeted 'gunshots @Westfield @Hornsby please stay out of the area guys'.

Emergency services were called to Westfield shopping centre in Hornsby about 11.50am on Thursday after reports of a man was armed with a knife

Mr Clemenson told Daily Mail Australia 'at least 3 shots [were] fired, people were screaming and running away from the fountain area'.

Witness and butcher Adam Stratton told 9News: 'I've never seen anything like it. Watching all these people run was pretty scary… There were three pretty loud gunshots.'

'It's still pretty crazy out here. It's not inside – it's outside in the sunny area'.

Another witness, Genevieve Smith, told Daily Mail Australia an 'older lady' had been shot in the leg.

'There was a lot of blood but she is still conscious and there were another two people on the ground,' she said.