A gunman who killed a man and took a woman hostage before dying in a police shootout had been acquitted of plotting a terror attack at a Sydney army base years earlier, police said on Tuesday. Three police officers were wounded.

The siege on Monday at an apartment building in a Melbourne suburb was being treated as an act of terror, but Victoria state Police Chief Commissioner Graham Ashton said the gunman appeared to have acted alone and not as part of any ongoing plot or threat.

"There is nothing that we've found thus far that would suggest to us that this was anything that was ... planned or done in concert with others," Mr Ashton said.

The gunman, Yacqub Khayre, 29, was one of two men acquitted by a jury in 2010 of plotting a suicide attack in Sydney. Three people were convicted of conspiracy for that plot, which police thwarted before it could be executed.

Khayre, a Somali refugee, served prison sentences for arson and violent crimes unrelated to extremism before being paroled in November, Ashton said.