Melbourne Terror Attack: Man Shot Dead After Fire and Fatal Stabbing

The dramatic scene was captured by Twitter user @chrismacheras

After Khalif emerged from the vehicle, he then stabbed three men - one fatally - before his quest for martyrdom ended with police bullets.

Only after he was shot did police realize that three members of the public, all men, had been stabbed.

Several bystanders and police officers were attacked by an assailant on central Melbourne's Bourke Street on Friday afternoon.

In one video posted on Twitter, the man can be seen repeatedly lashing out at two officers, apparently with a knife. "A fire was then started in that vehicle", Ashton said.

Earlier, Superintendent David Clayton had said investigators were "keeping an open mind" about motive.

As the attacks continued, one policeman shot the suspect in the chest, leaving him in a critical condition.

The spokesperson confirmed that one person had died in the stabbing attacks and that the attacker was in hospital. It said the man was an Islamic State fighter and had responded to IS calls for attacks in countries that are part of the worldwide coalition fighting the militants in Syria and Iraq.

Ashton said police were "doing security reassessments of these events in light of what's occurred", but there was "no ongoing threat we're now aware of in relation to people surrounding this individual".

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At the same time, passersby called out that members of the public had been stabbed.

The man and one victim died at hospital, while two others were treated for injuries, according to the police.

Shire Ali had already crashed his vehicle containing gas cylinders on the busy Bourke Street before stabbing three men and attacking officers.

Speaking on the Today Show , he said Khalif's auto contained gas cylinders and it is believed he meant to cause an explosion.

Police said the Muslim brothers were from a Somalian family that moved to Australia in the 1990s.

"They're all very angry ... because it brings a bad impact to the community", he said.

Scott Morrison, the Australian Prime Minister, said the national terrorism advisory remained at "probable", the midpoint of a five-tier system, and told reporters in Sydney that radical Islam was the issue.

Bourke Street has since been reopened, and Melbourne residents are advised that planned weekend events at Flemington and Remembrance Day commemorations will still go ahead as planned.

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