One man is dead and two others are in hospital with stab wounds after a rampage in Melbourne’s Bourke Street shopping precinct ended when police shot the assailant in the chest.

He died later while undergoing emergency surgery.

Victoria police confirmed on Saturday morning the attacker has been named as 30-year-old Hassan Khalif Shire Ali (his surname is Shire Ali).

Joint Counter Terrorism Team investigators are currently executing search warrants at two addresses in Werribee and Meadows Heights.

Police dismissed earlier reports regarding the disappearance of Shire Ali’s wife saying: ” Police have spoken to the wife of the offender – she is not missing”.

Shortly after 8pm on Friday night Chief Commissioner Graham Ashton told a press conference: “We are treating this as a terrorism event”.

“He is known to police and federal intelligence authorities,” he said, adding that “family members are certainly known to us from a terrorism perspective”.

Witnesses said Shire Ali allegedly began attacking bystanders with a knife after crashing his car into shops on Bourke Street and setting it alight with a “bomb” at 4.10pm on Friday.

Police have been told by witnesses that Shire Ali was yelling “Allahu Akbar” at some stage, although Commissioner Ashton declined to confirm those reports.

Footage being circulated online shows Shire Ali in a violent confrontation with police, repeatedly lunging at officers with a knife before being shot in the chest at close range by one officer as he lunged at another.

Speaking at a press conference, Victoria Police spokesman Dave Cope told media police were alerted to the incident about 4.30pm, and nearby officers responded within 60 seconds.

“As they got out of the car, they were confronted by a male brandishing a knife and threatening them,” he said.

“Passers-by were calling out that members of the public had been stabbed.

A police officer was treated for a minor injury at the scene.

The Bomb Response Unit attended and have deemed the burnt vehicle safe and a crime scene has been set up.

Road blocks remained in place throughout Friday night and members of the public are asked to avoid the area on Bourke Street between Russell and Swanston Streets.

Police are expected to make a further statement on the incident before midday on Saturday.

WARNING: GRAPHIC IMAGE

The body of an older man lies where he fell soon after the carnage unfolded. Photo: AAP

The bomb-response team was called to the scene and made sure the area was safe.

Police said the attacker’s vehicle contained a number of gas bottles which posed an explosion threat.

One of the victims was identified by his wife via a Facebook post as Tasmanian Rodney Patterson, a well-known businessman and former president of the South Launceston Football Club.

Rodney Patterson is doing well in hospital, according to wife Maree. Photo: Facebook

“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,” Maree Patterson told friends.

“Can’t take calls at the moment but will speak to everyone when I can,” she wrote.

“Thanks to everyone for their wishes and caring.”

Commissioner Ashton said the vehicle had contained a number of gas bottles.

After being shot at point-blank range while coming at two officers as he slashed wildly with his knife, the attacker fell backwards onto the footpath.

Police pounced on him. As bystanders watched, rolled him over and handcuffed his hands behind his back.

Our thoughts are with a brave Tasmanian, Rod Patterson, his family and friends. A nicer bloke you wouldn’t meet. It’s not surprising he would step in to help others. We all wish him well.

— Will Hodgman (@WillHodgman) November 9, 2018

He was in a critical condition when he arrived at hospital and rushed into emergency surgery but died before regaining consciousness.

Police have requested any witnesses to report to Melbourne West Police Station, and for anyone with any images or video to post it to the Victoria Police Facebook page.

Paramedics rushed three people to hospital: one in a critical condition with an injury to the neck, another one with a head injury in an unknown condition and a third person whose condition is now known.

WARNING: CONFRONTING FOOTAGE

https://twitter.com/windix/status/1060780546899365888?ref_src=twsrc%5Etfw

Witness Tiffany Nguyen told The New Daily she was terrified.

“I was so scared. I had about 10 clients and they all ran away when they heard the noise.”

“I have goosebumps,” she added, pointing to her arm.

Another witness, Iris Liu, who works in nearby Little Collins Street, told The New Daily she saw an injured man on the roadway as paramedics  tried to save him.

“There was blood all over the place. It was the scary. The blood. When you see something like that…

“I saw two people, paramedics, trying to help.”

Another witness described the police response as “overwhelming”.

As many as 20 police cars and special operations group units attended the scene.

Passenger Meghan was aboard a nearby tram.

“I was on a tram when a couple of people started saying ‘someone has a knife’,” she said.

“A bit later i heard a ‘bang’, not an explosion but like a gunshot,” she said.

Police have urged people to avoid the area and are directly traffic away from the area.

WARNING: CONFRONTING FOOTAGE

Nearby workers told The New Daily they were terrified.

“We heard ‘boom’ and we thought it was a bomb,” said one

“We saw a lot of people running away. Ten minutes later I went out and saw a car on fire.”

Police are asking anyone who witnessed the event to contact them with information.

They are urging the public to stay away from the Bourke St Mall area.

Footage on social media shows a man attacking two police officers with a knife before taking a bullet to the chest.

WARNING: GRAPHIC FOOTAGE

https://twitter.com/briannatravers/status/1060784337644179456

On Bourke St. Roads blocked. pic.twitter.com/wimeJLNXWy

— mike yang (@fayfayang) November 9, 2018

#bourkest source from wechat (I am not the author) pic.twitter.com/n69nDiGjxt

#melbourne #MELBATTACK pic.twitter.com/ttvtpNtfeV

— 8881997x (@8881997x) November 9, 2018

In a statement, Victoria police said it is normal for people to have “strong emotional or physical reactions following a distressing or frightening event”.

People can seek help and advice by visiting your local doctor or calling: Lifeline 13 11 14, GriefLine 1300 845 745 and BeyondBlue 1300 224 636