Updated 12pm

Australian police said one person was dead after a man stabbed three people in the city of Melbourne and that they are treating the attack as terrorism. Ed Giles reports.

Police in Australia are blaming a lone terrorist for the deadly stabbing in the city of Melbourne.

At least one person is dead after a man stabbed three people in the city's centre on Friday before being shot by police. The attacker later died.

Video posted to Twitter and broadcast on television showed a man repeatedly swinging an object at two police officers in the downtown area of the city. One of the officers raises his weapon, a shot is heard and the man falls to the ground clutching his chest.

"Police shot the male in a chest and he is now in critical condition under guard in hospital," Victorian police superintendent David Clayton told reporters.

Police said they had initially responded to a car on fire. The bomb response unit has been called in and the streets closed to the public.

The street where the car caught fire was the scene in January 2017 of a fatal but not terror-related incident in which a man drove his car at pedestrians at high speed, killing six people and wounding about 30.

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