Police initially responded to reports of a auto on fire at the corner of Bourke and Swanston streets. Bystanders jumped into the fray, one wielding a chair, another a shopping trolley, before the assailant was finally neutralised.
A handful of videos and images uploaded to social media appear to show the man attempting to stab police before he is shot. See the videos below.
But as the attacks continued unabated, before one officer opted for lethal force, shooting the suspect in the chest. He's been transported to hospital under police guard.
Ashton added that Counter Terrorism Command will investigate alongside Victoria police.
Superintendent David Clayton confirmed the suspect had stabbed three other people before attacking police.
The two surviving victims are being treated in hosptial. Their conditions weren't made known.
Police are treating the incident as a terror attack.
Police are not looking for anyone else in relation to the events.
Officers were initially called to reports of a auto fire near Bourke Street, a busy thoroughfare, at about 16:20 local time (05:20 GMT).
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