Auto smashes into Melbourne's Bourke Street Mall and bursts into flames

Car on fire after crashing into Melbourne's Bourke St Mall

Car on fire after crashing into Melbourne's Bourke St Mall

One person was confirmed dead after multiple stabbing incident during rush hour in the Australian city of Melbourne, police said on Friday, as the city was placed on lockdown.

Video has emerged of a man lunging at police with what appears to be a knife before being shot in Melbourne's Bourke St.

In a statement, a Victoria Police spokesperson said officers responded to reports of a auto on fire on Bourke Street, near the corner of Swanston Street about 4.20pm.

"A man was arrested at the scene and has been taken to hospital under police guard in a critical condition", the statement said.

Victoria Police Superintendent David Clayton told reporters there are no know links to terrorism.

Local media showed footage of a man slashing wildly at police officers before being shot.

Another person at the scene said: "I saw people running, screaming".

"A second person has been taken to hospital with a head injury".

The suspect pictured attacking police.

'The exact circumstances are yet to be determined at this stage.

Police are telling all members of the public to avoid the CBD, although dozens of witnesses are being interviewed by officers at the scene.

The officers then retreated to the other side of the road as the attacker, dressed in a long jacket and grey trousers, ominously pursued them as horrified bystanders called on police to shoot him.

"He seemed to be waving something, people around me screamed that he had a knife, but I couldn't see clearly from where I was", a witness told ABC News. He confirms that the offender has been shot and is under police guard.

The footage, uploaded to Twitter, also shows pedestrians alternately hovering nearby and trying to make a quick exit from the scene.

The incident occurred on Bourke Street just outside the Target Centre, near the intersection of Swanston St.

'Police response was swift and overwhelming.

"I heard a massive explosion, the vehicle is completely alight".

It comes as a trial continues into the horrifying rampage in Bourke St in January a year ago.