'Terrorist' on stabbing rampage shot dead in Melbourne

A police officer inspects a body at the crime scene following the stabbing incident in Melbourne, Australia, on Friday (AFP)

SYDNEY, Australia: A Somali man went on a stabbing rampage in the city of Melbourne on Friday after driving a car laden with gas cylinders up on a footpath, where it caught fire, and police said they are treating the attack as terrorism.

The man stabbed three people, one fatally, before he was shot by police. He later died in hospital, Victoria Police Commissioner Graham Ashton told reporters.

The attack occurred on Bourke Street in the central downtown area.

"We don't believe there is an ongoing threat at this stage, but certainly we are treating it as a terrorism incident," Ashton said. He declined to identify the attacker, but said he was Somali with "family associations that are well known to us".

The man was known to Australia’s spy agency, ASIO, and had links to convicted terror plotters, according to the Herald Sun.

Mr Ashton said security arrangements at Remembrance Day memorials and other public events scheduled over the weekend will be reassessed and it was likely police numbers there boosted.

Police said officers "initially responded to a report of a car on fire" in the city centre at 4:20 pm local time, but discovered at the scene that members of the public had been stabbed.

Media showed video footage of police then trying to restrain a large man in a dark tunic who was lunging, slashing and stabbing wildly at two officers as a pick-up truck burned nearby.

The officers were seen trying for at least a minute to detain the man peaceably as his attacks on them continued, before one officer shot him in the chest.