Melbourne terrorist's passport was cancelled amid fears he'd travel to Syria

The lone terrorist who murdered a man in Melbourne's Bourke Street was known to authorities for his radical views and had his passport cancelled amid concerns he would travel to Syria, federal police say.

Yesterday afternoon, 30-year-old Hassan Khalif Shire Ali pulled up in Bourke Street in his four-wheel drive, containing gas cylinders turned to their open position.

The Somalia-born Shire Ali stabbed three men, with a man in his sixties dying at the scene and two others recovering in Royal Melbourne Hospital.

A 24-year-old man from Hampton Park and a 58-year-old Launceston man, said to be Tasmanian businessman Rod Patterson, were taken to hospital with non-life threatening injuries.

During the attack, police and civilians tried to subdue Shire Ali before a new police member, only three months out of the academy, shot him in the chest. Shire Ali died in hospital.

Police believe he intended to cause an explosion in the city centre, a plan that Chief Commissioner Graham Ashton said "wasn't sophisticated", with the car catching fire but not exploding.

Police are confident the event was a terrorist attack, which Islamic State has claimed responsibility for.

Police have not revealed the identity of the deceased man, but media reports have named the victim as Sisto Malaspina, the owner of Melbourne's iconic Pellegrini's Espresso Bar.

Australian Federal Police acting deputy commissioner Ian McCartney told reporters today that Shire Ali was known to have held radical views and that his passport was cancelled in 2015.

He said it was believed Shire Ali was "inspired" by Islamic State rather than having direct links with the organisation.

"The assessment was that person was not a threat at that time," Deputy Commissioner McCartney said.

"Obviously, a focus of the investigation will be ... how and why and when and where he moved along that path of radicalisation ."

Police have confirmed they have spoken to Shire Ali's wife and that she is not missing.

Australian Federal Police's Ian McCartney says Hassan Khalif Shire Ali was known to have radical views. Source: Nine

They also confirmed in a statement that joint counter terrorism team investigators were executing search warrants at two addresses in Werribee and Meadows Heights this morning.

Additional security and a greater police presence has been placed in Melbourne's CBD for today.

Melbourne Lord Mayor Sally Capp thanked police for their fast action in minimising harm and reopening the area for public use this morning.

She told reporters it was "wonderful" to see Melburnians coming back into the city centre.

When asked if police should have shot Shire Ali in the leg rather than the chest, Commissioner Ashton said police were trained to kill if they believed their life or a member of the public's life was at risk.

"We don't train people to wound people with firearms," he said on the Today Show.

"You're trained to shoot to kill, not to shoot to wound."

Commissioner Ashton also said there was no known link to James "Dimitrious" Gargasoulas, who is currently on trial facing six charges of murder after allegedly mowing down pedestrians in January 2017.

Results of a post-mortem examination on Shire Ali's are expected to be available in a few days time, when investigators will be able to comment on whether the assailant was drug-affected.

Scott Morrison says 'Extremist Islam' Australia's biggest threat

Meanwhile, Prime Minister Scott Morrison has called out "radical, violent, extremist Islam" as posing the greatest threat to Australia's national security.

Speaking in response to the Bourke Street terror attack, Mr Morrison said he was the first person to protect religious freedoms.

"But that also means I must be the first to call out religious extremism," he said at a press conference in Sydney today.

Mr Morrison made it clear no religion was immune and it took many forms around the world.

"But here in Australia, we would be kidding ourselves if we did not call out the fact that the greatest threat of religious extremism in this country is the radical and dangerous ideology of extremist Islam," he said.

Mr Morrison said he had long-standing relationships with the Muslim community and it was them who had raised with him their concerns about radicalism in recent years.

"I have sat in the living room of a family whose four sons went and fought for ISIS," he said.

"And they all died. I have seen the look of complete loss in the eyes of a mother and a father ... confused by people who came and corrupted their children."

Mr Morrison urged religious leaders to protect their communities to ensure "dangerous teachings and ideologies" didn't spread in Australia.

"They must be proactive, they must be alert and they must call this out in their communities," he said, adding the government and wider community needed to work respectfully with them.

Mr Morrison also urged Australians not to be intimidated by yesterday's attack.

"Keep being yourselves, keep being Australians," he said.

"Be proud of who you are, because I know you are and that is what will ensure we will always defeat this insidious evil that comes at us every single time."

Hassan Khalif Shire Ali attacked three men with a knife, killing one, before lunging at police. Source: 1 NEWS