HOME Affairs Minister Peter Dutton has pleaded with Australians to help close a "black spot" in the country's ability to detect terror threats in the wake of the Bourke Street attack.

"There is a real black spot for us, and that is a vulnerabilty," Mr Dutton admitted today, citing comments from Duncan Lewis, the Director-General of Security at ASIO, who said potential terrorists were using encrypted apps so their messages couldn't be discovered.

"It is even more difficult today than it was five or ten years ago to try to deal with some of these cases," Mr Dutton said.

"The police can't contemplate every circumstance.

"Where you have someone who is buying chemicals, importing or purchasing online different items that might be precursors to make up an explosive device, you would expect there to be intelligence around that activity.

"Where you have someone who picks up a kitchen knife and grabs a couple of gas bottles and drives into the CBD, these are very difficult circumstances to stop."

On Friday afternoon, 30-year-old Hassan Khalif Shire Ali pulled up in Bourke Street in a four-wheel drive, containing gas cylinders turned to their open position, in what police said was a failed plan to cause an explosion.

The Somalia-born Ali then stabbed three men, including the popular 74-year-old Italian restaurateur Sisto Malaspina, who died at the scene. The two other victims are now recovering in Royal Melbourne Hospital.

Police had no proof Ali was planning an attack beforehand.

A police officer coming face-to-face with terrorist Hassan Shire Ali on Bourke St.Source:Supplied

Mr Dutton did not reveal why Ali's passport was revoked in 2015, saying only that he had been spoken to by ASIO and other agencies and there was "no evidence" an attack was imminent.

"The judgement made about this individual was that he was not in the planning stage of the attack," he said.

The Home Affairs Minister indicated it was critical for Australians to report suspicious activity, to help authorities compensate for the "black spot".

"Unless there's advice, as I say, from a community member or from a family member, or there's advice as the result of a surveillance process or intercept of a telecommunications device, then it is very, very difficult," Mr Dutton said.

"My plea is to people within particularly the Islamic community, but across society. If you have information, if you see a behaviour of an individual or family member, someone in a workplace, that causes you concern, provide that information.

"It may lead to somebody not going to Bourke Street Mall or not committing an offence that results in loss of life.

"There may be no phone call. There may be no advice or planning or purchasing of particular precursors to make an improvised explosive device. So again, we need to be realistic about this.

"That is why it is important for us to get as much information from the imams, from spouses, from family members, community members, council workers, people that might be interacting with those that might have changed their behaviours."

ATTACKER'S SCARY 'DELUSIONS'

We are gradually learning more about the troubled life of the Bourke Street terror attacker, Hassan Khalif Shire Ali.

The Age reports Ali had grown increasingly "delusional" in the weeks before his deadly rampage in Melbourne.

Isse Musse, an imam and friend of Ali's family, has told the newspaper Ali was "complaining he was being chased by unseen people with spears".

Another source said his life had "spun out of control" as he dealt with mental health and substance abuse problems.

Ali had been kicked out of the family home several times. Less than a week before the attack he was seen "storming out" of the property and appeared "agitated".

The Sunday Herald Sun reports he had recently split from his wife.

A Facebook photo of Hassan Khalif Shire Ali.Source:Supplied

JUNIOR POLICE OFFICER'S HEROICS

On Friday afternoon, the 30-year-old Ali pulled up in Bourke Street in his four-wheel drive containing gas cylinders turned to their open position, in what police said was a failed plan to cause an explosion.

The Somalia-born Ali then stabbed three men, including the popular 74-year-old Italian restaurateur Sisto Malaspina, who died at the scene. The two other victims are now recovering in Royal Melbourne Hospital.

During the attack, police and civilians tried to subdue Ali before a new police member, only three months out of the academy, shot him in the chest. Ali died in hospital.

Chief Commissioner Graham Ashton was full of praise for the officer, as well as another junior policeman who was on the scene.

"These members found themselves in a dangerous situation very quickly," Mr Ashton said.

"They acted very bravely. They endeavoured to do their job and they did that pretty effectively and bravely. They followed their training really well (and) I'm proud of their efforts."

Mr Ashton said police were trained to kill if they believed their life or a member of the public's life was at risk.

"We don't train people to wound people with firearms," he said.

"You're trained to shoot to kill, not to shoot to wound."

He said the two junior officers were "in good spirits although shaken up".

ALI 'INSPIRED' BY ISLAMIC STATE

Australian Federal Police acting Deputy Commissioner Ian McCartney told reporters on Saturday that Ali was known to have held radical views and that his passport was cancelled in 2015.

He said it was believed Shire Ali was "inspired" by Islamic State rather than having direct links with the organisation.

"The assessment was that person was not a threat at that time," Mr McCartney said.

"Obviously, a focus of the investigation will be ... how and why and when and where he moved along that path of radicalisation."

Police confirmed in a statement that joint counter terrorism team investigators executed search warrants at two addresses in Werribee and Meadows Heights on Saturday morning.

The man confronts police in Bourke St this afternoon. Source: Chris Macheras.

Premier Daniel Andrews said he had been briefed by police and intelligence agencies, including ASIO.

"This person (the attacker) was as much on a list because of his familial connections and others that he associated with as he was for any conduct that he had been involved in," he said.

"No history of violent offending, and I wouldn't go any further than that." Mr Andrews said he had not received any advice that security measures in Bourke Street and surrounds needed to be boosted.

Prime Minister Scott Morrison said Ali had violated the nation's trust.

"The greatest threat of religious extremism in this country is the radical and dangerous ideology of extremist Islam," he said.

Mr Morrison said Ali was one of about 400 people on a national ASIO terror watch list.

"Here in Australia we would be kidding ourselves if we did not call out the fact that the greatest threat of religious extremism in this country is the radical and dangerous ideology of extremist Islam," Mr Morrison said.

"There is a special responsibility on religious leaders to protect their religious communities and to ensure dangerous teachings and ideologies do not take root here."

COFFEE ICON'S FINAL MOMENTS

The death of Melbourne coffee icon

Nino Pangrazio and his partner Sisto Malaspina.

has rocked the community.

The Herald Sun reports a former nurse performed CPR on Mr Malaspina at the scene in a desperate attempt to save his life. But he had lost too much blood through his stab wound.

"I know I did everything I could to try and save this poor man," she said.

"I had to wipe the blood off his brow. I needed to give him that dignity because his face was so kind."

The woman told him: "I'm so sorry. I'm so sorry. At least you are now at peace."

Staff at Pellegrini's Espresso Bar, a well-known cafe Mr Malaspina had owned for over 40 years, have been in mourning since the incident.

The 74-year-old took over the coffee bar in 1974 and maintained the tradition of the original owners. The popular establishment is well-known for its traditional Italian cooking and longstanding menu.

"Pellegrini's was the number one in the way it did things, the way things should be done - fresh ingredients, taken from the growers to the market to the shop," Mr Malaspina told Hospitality Magazine last year.

"Everything done by hand. No mechanisation, no additives. Everything was simple, fresh and beautifully put together.

"And it hasn't changed at all. It's still the same menu, prepared in the same way. Slow cooking, no machinery, done by hand … This is the way food should be done. It's not contemporary food. It's secular, traditional, home cooking."

The surviving 58-year-old victim has been named as Rod Patterson, a businessman from Tasmania. In a tweet, Tasmanian Premier Will Hodgman praised him for his bravery, saying "a nicer bloke you wouldn't meet".

His wife Maree posted on Facebook that Rod was "doing OK given the circumstances".

"Unfortunately we got caught up in the attack in Bourke Street this afternoon and Rodney was hurt - good news is he is in a great hospital and doing OK given the circumstances - can't take calls at the moment but will speak to everyone when I can," she wrote.

"Thanks to everyone for their wishes and caring."

The 26-year-old victim, who was a security guard, has not been named publicly.

An Ambulance Victoria spokesperson earlier revealed that one of the survivors sustained a neck injury and the other, a head injury.

Police officers also received minor injuries, one of them from being punched, and some cuts and scratches.

HEROIC 'TROLLEY MAN' SPEAKS OUT

THE "trolley man" who was hailed a hero on social media for taking on a terrorist has revealed what happened during the deadly terror attack in Melbourne yesterday.

The man attempted to help police officers stop the terrorist - who had already killed one person and injured another two - by rolling a shopping trolley in his path. He was one of two bystanders who stepped in as killer Hassan Khalif Shire Ali tried to claim more victims.

A man with a shopping trolley twice tried to ram the man to stop him. Another was wielding a chair. Incredible bravery @theheraldsun pic.twitter.com/w473DKA4wr — Josh Fagan (@faganjosh) November 9, 2018

"Trolley man" today spoke to 7 News, who didn't identify him, and told the network he believes he helped save lives by defending the city.

"I've seen the trolley to the side so I've picked it up and I ran, threw the trolley straight at him, got him, but didn't get him down," he said.

"I did that motion quite a number of times but it just wasn't getting him down."

The attacker, from Melbourne's northwestern suburbs, was soon shot in the chest by police, before he died in hospital last night.

Prime Minister Scott Morrison said the Somali-born Bourke Street terrorist had violated the nation's trust - saying "the greatest threat of religious extremism in this country is the radical and dangerous ideology of extremist Islam".

Mr Morrison said Somali-born killer Hassan Khalif Shire Ali was one of about 400 people on a national ASIO terror watch list.

"Here in Australia we would be kidding ourselves if we did not call out the fact that the greatest threat of religious extremism in this country is the radical and dangerous ideology of extremist Islam," Mr Morrison said.

"There is a special responsibility on religious leaders to protect their religious communities and to ensure dangerous teachings and ideologies do not take root here."

The Bourke Street knifeman was not actively monitored prior to his stabbing frenzy, despite the fact intelligence agencies cancelled his passport three years ago.

In a press conference today, Victoria Police confirmed Somali-born killer Hassan Khalif Shire Ali had been known to intelligence agencies for years, but he was not being actively monitored prior to the attack.

They said his passport was cancelled in 2015 after ASIO determined he was planning to travel to Syria.

Despite this, Shire Ali was not kept under close watch. "He was never a target of the JCTT in terms of the investigations we undertook," said Commissioner Ian McCartney. "The assessment was made that while he had radicalised views he didn't pose a threat to the national security environment.

Car on fire in Bourke St Mall. Source: @Meegslouise

"Obviously, the circumstances of how and when he moved from having these radicalised views to carrying them out will be a key focus of the investigation we undertake."

He said the tragedy yesterday was a "reality check".

"Even with the fall of the caliphate in the conflict zone, the threat continues to be real," the commissioner said. "But this is a complex and challenging business."

Officers did note that, when a person's passport is cancelled due to being a potential terror risk, there are "ongoing daily, weekly and monthly reviews" in relation to the individual.

But the commissioner repeatedly stressed that when ASIO cancelled Shire Ali's passport in 2015, the attacker "was not a threat at that time".

Officials said the current threat had been mitigated and they do not believe any related individuals - including the attacker's wife, who police have spoken to - pose a terror threat.

On Saturday afternoon, the Herald Sun revealed incredible new footage of the moment police were forced to shoot Ali.

Car horns are blaring and people can be heard yelling "shoot him" as the officers back away from the knife-wielding man.

MELBOURNE COFFEE ICON KILLED IN ATTACK

Melbourne coffee icon Sisto Malaspina has been identified as the murdered victim in Bourke Street's terror attack yesterday.

Staff at Pellegrini's Espresso Bar, a well-known cafe Mr Malaspina had owned for over 40 years, have been in mourning since the incident, The Herald Sun reports.

The 74-year-old took over the coffee bar in 1974 and maintained the tradition of the original owners. The popular establishment is well-known for its traditional Italian cooking and longstanding menu.

Police are expected to confirm his identity later this afternoon.

Sisto (middle) pictured with his business partner Nino Pangrazio outside the cafe in 2010.

"Pellegrini's was the number one in the way it did things, the way things should be done - fresh ingredients, taken from the growers to the market to the shop. Everything done by hand. No mechanisation, no additives. Everything was simple, fresh and beautifully put together," Malaspina told Hospitality Magazine last year.

"And it hasn't changed at all. It's still the same menu, prepared in the same way. Slow cooking, no machinery, done by hand … This is the way food should be done. It's not contemporary food. It's secular, traditional, home cooking."

POLICE STORM KNIFEMAN'S FAMILY HOME

Police have surrounded a house linked to Hassan Khalif Shire Ali, the man behind yesterday's Melbourne terror attack.

Officers have been standing guard at the Werribee home since around 8am this morning, The Herald Sun reports.

It's understood the attacker's family are inside the house and are co-operating with police.

BOURKE ST KILLER IDENTIFIED

VICTORIA Police have identified the Bourke Street knifeman as Mohamed Khalif.

The 31-year-old Somali-born attacker, from Melbourne's northwestern suburbs, died in hospital last night after being shot in the chest by police.

Police Commissioner Graham Ashton said Khalif was known to counter-terrorism authorities, both "at the national level" and to the state police.

Car on fire in Bourke St Mall. Source: @Meegslouise

"We're certainly confident it was a terrorist attack and that's the way we've been treating it overnight," he told The Today Show this morning. "He's pulled up in a car with gas cylinders. It looks like he's attempted to ignite a fire in the car... we believe with a view to ignite these canisters with some kind of explosion, but that didn't eventuate.

"Then he's gotten out of the car, we allege with an attempt to cause serious harm to the public."

He said Khalif has a prior criminal history in relation to driving offences, theft and previous cannabis use.

Mr Ashton said the knifeman was not being actively monitored prior to the attack.

He also confirmed police had spoken with the knifeman's wife, in contrast to previous reports that she had gone missing.