An innocent young man wrongly identified as teenage terror suspect Abdul Numan Haider says he cannot leave his house because he fears being branded a terrorist.

Fairfax Media has apologised for mistakenly publishing a photo of Melbourne 18-year-old Abu Bakhar Alam on the front pages of The Age, the Canberra Times and the Sydney Morning Herald on Thursday.

The papers ran Mr Alam's photo with headlines including "Teenage Terrorist", "Teen Jihad" and "Teen Takes Terror to the Suburbs", dubbing him a "schoolboy turned fanatic" who "set terror trap for police".

Haider was shot dead on Tuesday night after stabbing counter-terrorism police officers in Melbourne.

Fairfax issued a statement apologising unreservedly to "the young man in the suit" and admitted that Mr Alam had "no connection whatsoever with any extremist or terrorist group".

Mr Alam told Lateline he was "scared and terrified" and feared he and his family may come to harm.

"I know that people are going to recognise me and they might harm me and my family," he said.

"The apology doesn't - it's not going to get that reputation that we had within the community [back]. We've had a good one. We haven't had a bad name."

The Alams lost a family member to a suicide bomber in Afghanistan and in 2007 were given safe haven under Australia's humanitarian program.

"We came here to live - have a happy life - not live in a country where we can't live freely, have the freedom to express ourselves," he said.

Mr Alam said he never uploaded the engagement party photo online, and did not know how Fairfax Media obtained it.

He is about to graduate from high school and said he worried "enormously" about how the mistake would affect his future.

Mr Alam told Fairfax Media station 3AW he was considering legal action "because it's not something small".

Family 'haven't heard anything' from Fairfax

Mr Alam's uncle, Ahmad Shah Taniwal, said the family discovered the mistake on Facebook.

"This morning when I wake up - you know people check Facebook - I saw Abubkhar's picture there," he told PM on Thursday.

"I said 'maybe it looks like him', then I said 'oh yeah maybe they were mistaken'. Then I called his father. He said 'yeah I'm shocked too'."

To add insult to injury, Mr Alam's family originally came to Australia from Afghanistan as refugees fleeing persecution.

Mr Taniwal said Mr Alam's grandfather was a former Afghan provincial governor who was killed by a Taliban suicide bomber in 2006.

"We came as refugees because my uncle was governor of an Afghan province," he said.

"[He was] killed by a suicide bomber so the Australian government helped us.

"We came here to be safe, now we're on the front page as a terrorist."

Mr Taniwal said he had not spoken to his nephew since the photo was published, but guessed he would be at his job at Hungry Jack's.

"He's probably at work. He studies but it's school holidays so he's probably at Hungry Jack's," he said.

When asked whether Mr Alam knew Haider, Mr Taniwal said: "I didn't even know the family was Afghan. [I] found out last night he was shot dead."

Mr Taniwal said his extended family in Australia and overseas were shocked and distressed by the mistaken use of Mr Alam's photo.

Fairfax said it had spoken to the family multiple times yesterday morning after realising the error.

It said it was investigating the mistake.