A baby is in a critical condition in hospital after being thrown from its pram when a car ploughed into a busy street in Melbourne on Tuesday.

The youngster was said to have been dragged down the street during the incident before police shot the 26-year-old driver and arrested him.

Part of the pram was crumpled after it became caught under the car and was pictured toppled on its side surrounded by police tape in the Australian city’s central business district.

The roof of the pram was left lodged in the car’s windscreen.

The wreckage of a car is seen as police cordoned off Bourke Street mall after a car hit pedestrians in central Melbourne (Edgar Su/Reuters)

Reports said the toddler's mother shouted “where is my baby” as people ran to escape.

A witness described seeing the youngster lying in the road before a paramedic moved the toddler, said to be aged three or four.

The incident began in the early afternoon when a man was seen driving in circles in the middle of a major junction in Melbourne.

Melbourne car attack: Three killed as car ploughs into pedestrians

The vehicle then careered down a pedestrianised road, hitting more than 20 people including a three-month-old baby.

Police said they did not believe the incident was terror-related and may have been linked to a stabbing earlier that day.

Two adults and a child died after being struck by the car, Police Chief Commissioner Graham Ashton said.

A fourth person died in a hospital on Friday night.

Another 15 people were injured, with five in critical condition, including a child.

Witnesses described seeing the victims “flying like skittles” as the car ploughed into the crowded street.

A pram is seen as police cordon off Bourke Street mall (Edgar Su/Reuters)

Sharn Baylis, a tourist from the southern city of Adelaide, said: “He was just collecting people as he was going along and they were flying like skittles, basically."

She told the Australian Broadcasting Corporation: "He was just driving in a really determined fashion, just in a straight line. There was no hesitancy as he got to the crowds and he didn't swerve, it was just - he just drove through them."

Before he began his rampage through Melbourne, police say he was involved in a domestic stabbing incident in a suburb.

Police tried to intercept his vehicle, but called off the chase.