A lone terrorist was responsible for a deadly stabbing attack that unfolded on Bourke Street in Melbourne's CBD on Friday afternoon.
One man was killed and two others injured after being stabbed by a man who set a ute alight outside the Target store near the busy intersection of Bourke and Swanston streets.
The attacker, who was a 31-year-old Somali community member known to ASIO, was shot by police after he repeatedly lunged at them with a knife.
He was taken to hospital in a critical condition, but died on the operating table.
A relative of the man was arrested on terror-related charges last year. However, sources said there had been no intelligence from counter-terror authorities about any serious threat.
"He is known to both Victoria Police and federal intelligence authorities," Police Commissioner Graham Ashton said on Friday night.
"There is no ongoing threat that we know of ... as I speak to you tonight.
"But certainly we are treating it as a terrorism incident. He's got family associations that are well known to us."
Late on Friday night, there were reports that Islamic State had claimed responsibility for the attack via the Amaq news agency.
It said the man was "one of Islamic State fighters" and had responded to IS calls for attacks in countries that are part of the international coalition fighting the militants in Syria and Iraq.
However, IS is known to have claimed responsibility for attacks in the past that it has not in fact had any connection to.
It is believed the attacker, who lives in Melbourne's north-western suburbs, arrived in Australia in the 1990s.
TWO VICTIMS IN HOSPITAL
Prominent Launceston businessman, Rod Patterson, 58, was one of two victims in hospital on Friday night. He suffered head injuries and was undergoing surgery.
The other victim, a 26 year-old man, was believed to be in a critical condition with neck injuries.
Patterson's wife, Maree, posted a message on social media thanking everyone for their wishes.
"So 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," she wrote.
Patterson, a former Autobarn franchisee and president of the South Launceston Football Club, owns an apartment in Melbourne.
The identity of the victim who died has not been released.
HOW THE ATTACK UNFOLDED
The attacker stopped his dual-cab ute on Bourke Street before setting it alight about 4.30pm local time (6.30pm NZ Time).
He then started attacking people with a knife, stabbing at least three people.
Witnesses told The Age they were shopping in the area when they saw a man throw what they believed to be a bomb into a car before it exploded.
They had initially thought the man was running to catch a tram close by, before a nearby police car rushed to the scene.
They heard screams and cries from the crowd before they were rushed from the area.
One bystander tried to push a trolley into the attacker. That man was pushed over onto the street, but got up and tried again with the trolley to stop the attack. Another man tried to ward him off with a traffic cone, a third was seen with a cafe chair.
Transit officers were the first to respond, with one officer using a tree to protect himself from the attacker as he lunged at them with the knife.
Police then shot the lone terrorist in the chest and arrested him before he was taken to hospital.
By 5.20pm (7.20pm NZT), the body of one of the victims was lying under a white sheet on Bourke Street surrounded by police tape, near the entrance to Russell Place. There were large spots of what appeared to be blood near the body, as well as a pair of men's black lace-up shoes.
About 6pm (8pm NZT), police confirmed the victim had died.
Fire crews later found a number of barbecue-style gas cylinders in the ute.
Premier Daniel Andrews condemned the attack. "This is an evil and terrifying thing that has happened in our city," he said.
He thanked police and praised the efforts of the civilians who had tried to help them.
"Those strangers, people who were bystanders, who knew nobody involved, who stepped in without a moment's hesitation to render support and assistance ... make all of us proud as well," Andrews said.
Meanwhile, Opposition Leader Matthew Guy said there should be no "moral squeamishness" when it came to dealing with extremism.
"There should be not moral squeamishness, we need to eradicate this kind of behaviour, because enough is enough," Guy said.
It is understood the Andrews government's counter terrorism subcommittee of cabinet will meet at 9am on Saturday (11am NZT).
The Premier has also suspended all election campaigning until at least Sunday afternoon.
A section of Melbourne's CBD remained in lockdown overnight after the attack sent Friday afternoon shoppers and commuters running for safety.
A large crowd of people also stood and filmed the man's confrontation with police.
Witnesses were taken to Melbourne West police station in police vans, some looking shaken.
On Friday evening, there were two dozen people in the police station foyer waiting to give statements. Most sat in three rows of chairs, before being called to one of six tables set up by police.
One man briefly exited the building to greet a woman. He looked shaken as he hugged her - one sleeve of his white jumper was stained with dried blood.
Earlier, a witness, Sarah Krug had told The Age she had been heading to the night noodle markets when "all hell broke loose".
Her immediate thought was, "Oh no, not another Bourke Street incident," she said.
"I thought the car was coming for us," Krug said.
"I didn't know what was happening there was just so much chaos and screaming."
'THEY ALL HAD PANICKED FACES'
Stuart Gaut was inside the McDonald's on the corner of Bourke and Russell Streets when he felt the building shake and heard an explosion.
As he ran to the entrance, he saw about 40 people sprinting past in fear. "They were bolting, they all had panicked faces," he said.
An amateur photographer, Gaut grabbed his gear and ran in the opposite direction, towards the scene, to take photos.
"I just saw the car, then the whole area was covered in smoke. There were a lot of policemen moving everyone away. It's funny how everyone just stands around and looks, no one was really running away."
Gaut then went back into the McDonald's, which was in lockdown for more than an hour, to pat the shoulder of a trembling witness recounting his account to police.
The Bourke Street Mall, including Myer and David Jones stores, was evacuated shortly before 5.30pm (7.30pm NZT).
Melbourne's anti-terror sirens and loudspeakers were used for the first time, sounding out across Bourke Street.
The message over the loudspeakers said: "This is Victoria Police, please evacuate the area."
The attack came on the second day of the highly-publicised murder trial of James Gargasoulas, who allegedly drove through Bourke Street Mall on January 20 last year, killing six people and injuring 27 others.