The actions of the 15-year-old gunman who shot dead a New South Wales police civilian employee were an act of terrorism, police say.

The radicalised youth of Middle Eastern background has been named as Farhad Jabar Khalil Mohammad.

He killed the police employee, Curtis Cheng, as he was leaving police headquarters at Parramatta in Sydney's west around 4:30pm yesterday.

The offender then fired several more shots at officers as they emerged from the building to respond to the incident.

He was killed when the officers, who are special constables, returned fire.

Commissioner Andrew Scipione said police were a long way from establishing a full picture of the gunman but could confirm he was of Iraqi-Kurdish background and born in Iran.

"We believe his actions were politically motivated and therefore linked to terrorism," Mr Scipione said.

"We have no information that this individual posed this type of threat but we will investigate thoroughly."

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He said police were also investigating how the 15-year-old was in possession of a gun and that the boy's relatives in Australia had been co-operating with police.

Mr Scipione confirmed the victim was Curtis Cheng, a 17-year veteran of the police force's finance department.

"He was a much-loved man, [he had] been with us a long time. I don't think I've ever heard anyone have a bad word about Curtis and he will be missed," he said.

Police executed a search warrant on Farhad Jabar Khalil Mohammad's home on Friday night and seized "laptops and iPads" which they are now examining for clues as to the boy's motivation.

Premier Mike Baird said the "chilling crime" would "echo around the world", while Prime Minister Malcolm Turnbull condemned the "cold-blooded murder, targeting the NSW Police Service".

"It was doubly shocking because it was perpetrated by a 15-year-old boy and it underlines the importance of families, communities, leaders being very aware of whether young people are becoming radicalised," Mr Turnbull said.

He urged the community to remember the Australian Muslim community would be especially appalled by the crime.

"We must not vilify or blame the entire Muslim community with the actions of what is, in truth, a very, very small percentage of violent extremist individuals," he said.

What we know about the gunman 15-year-old boy

15-year-old boy Iraqi-Kurdish background

Iraqi-Kurdish background Born in Iran

Born in Iran Actions believed to be politically motivated and linked to terrorism

Actions believed to be politically motivated and linked to terrorism Believed to have been working alone

Believed to have been working alone Has family in Australia

Has family in Australia Resided in the Parramatta area

Resided in the Parramatta area Was not known to police and had no criminal history

"The Muslim community are our absolutely necessary partners in combating this type of violent extremism."

Federal Opposition Leader Bill Shorten described the shooting as a "shocking incident".

In a statement he said Australians would struggle to comprehend how a 15-year-old boy would be part of a terrible crime.

"Our thoughts are also with the family of the alleged young perpetrator. Like all Australians, they will be struggling to comprehend how someone so young could be part of such a terrible crime," the statement said.

Mr Shorten promised to continue Labor's bipartisan approach to national security.

Mr Scipione praised the senior constables for the way they handled the situation.

"I don't think I've seen a greater act of bravery than what I saw last night with these three special constables," he said.

"Those special constables certainly put their lives on the line, knowing they were under fire, probably aware that somebody had been shot, could even have been aware that is was one of their own."

Mr Scipione assured the community police were "ready" to deal with deal with threats of terrorism.

"They are vigilant, they are on top of this, they are ready," he said.

"The response last night by our special constables would only go to show that they are prepared to deal with and can deal with anything they are confronted with.

"We are acutely aware that we need to right now be at the top of our game."

Both Mr Baird and Mr Scipione urged the community to go on with their lives.

"This is an incredibly important weekend, both here [and] in Melbourne, in terms of Grand Finals, and they should go on and they will," Mr Scipione said.

Mr Turnbull said State and Federal government agencies were working hard to protect Australians.

The Police Commissioner confirmed the victim was Curtis Cheng, a 17-year veteran of the police force's finance department. ( AAP )

"The Commonwealth agencies, the Security Service, the AFP and other agencies are working very closely with NSW Police," he said.

"We are utterly determined, totally united, professional and committed to ensuring Australia and its people are safe."

Mr Baird said people were trying to understand "how someone so young could commit such a hideous crime".

"We cannot let actions such as this divide us. We cannot let hate overtake us," he said.

"We have to come together and I'm sure that's what we'll see from this city and state."

No logical reason for attack is disturbing: police union

Pat Gooley from the NSW Police Association said he was confident that appropriate processes were in place to assess this kind of threat but found it disturbing there was no logical reason for the attack.

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"Police have been targets for a long time in their policing duties from drug offenders from mental health patients that require assistance," he said.

"We are used to being under threat. What's really concerning police is there's no rhyme or reason to these current terror threats."

Witnesses reported seeing two bodies covered with sheets on Charles Street.

A man who lives opposite the police headquarters recalled hearing gunshots.

"I said to my wife 'somebody is shooting somebody', and then she opened the door and she saw somebody ... the security guys from the headquarters ... he was standing and shooting the other guy, and before that the other guy tried to shoot."

Charles Street, Hassall Street and Wigram Road remain cordoned off this morning as police continue to search for evidence of what happened.