Australia: One dead in Melbourne multiple stabbing attack

One of the stabbing victims died at the scene while two are in hospital.

Police confirmed the man was shot and is in a critical condition.

The knifeman clutched his chest and and fell to the ground where he was quickly arrested on the pavement by two officers and rushed to hospital under police guard.

"Me and the managers ran out and that's when we saw the auto on fire and then we saw the guy on the floor and we wanted to help, there were two blokes helping him out already, he was face down pools of blood around his face", he told AAP.

Footage from the scene show a man making stabbing gestures at two uniformed officers near a burning auto before he was shot.

Earlier, Ambulance Victoria said they had assessed three people at the scene.

No terrorist link has been made at this stage of the investigation, according to police. "The area has been cordoned off", police said.

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

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

The Metropolitan Fire Brigade said the fire was contained within 10 minutes.

An eyewitness said after the auto burst into flames, someone walked up to the alleged driver and was stabbed directly in the chest.

A caller to ABC Radio Melbourne, Meegan, said she saw the incident from a tram. It sounded like a gunshot.

Police officers at the scene on Bourke Street in Melbourne after a man attacked others with a knife.

The message over the loudspeakers says: "This is Victoria Police, please evacuate the area".

Witness are being urged to come forward to police at Melbourne West Station.

Businesses in the are have closed and emergency crews are at the scene.

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

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