Melbourne attack: Man shot dead after fire and fatal stabbing

A man who set a car on fire and stabbed three people - one fatally - in the Australian city of Melbourne has died in hospital after being shot by police.

Authorities now say they are treating the attack as a terror-related.

The attacker was shot after confronting officers on a busy city street, authorities said. He was taken into custody in a critical condition.

The two survivors are in hospital, one reportedly in a critical condition. The suspect has not been named.

Police said they were "not looking for anyone further at this early stage".

"We don't believe there is an ongoing threat at this stage, but certainly we are treating it as a terrorism incident," said Victoria Police Chief Commissioner Graham Ashton.

He said the suspect was "someone that is known to us". Police say the man was of Somali origin and had been travelling in a vehicle packed with gas cylinders which caught fire.

Officers were initially called to reports of a car fire near Bourke Street, a busy thoroughfare, at about 16:20 local time (05:20 GMT).

"As they got out of the car, they were confronted by a male brandishing a knife and threatening them," Supt David Clayton said in a news conference.

Police said the scene had been cordoned off, and it was being "made safe" by a bomb response unit.

Footage circulating on social media shows a vehicle, which appears to have crashed into shop fronts, on fire.

"At the same time, passers-by were calling out that members of the public had been stabbed."

The police and State Premier Daniel Andrews asked people to avoid the area.

The incident comes as a man is on trial for a 2017 attack on the same street which left six people dead.

James Gargasoulas is accused of deliberately driving his car into pedestrians on Bourke Street, hitting 33 people.

His defence barrister has said he was in a drug-induced psychosis at the time.