A young child is among three people who were killed when a car was deliberately driven into pedestrians in Melbourne's CBD, police say.
Police said they shot the alleged driver, who was arrested with non-life-threatening injuries.
At least 20 people were injured, some seriously, in the incident that police said was linked to an earlier stabbing in the city's south. It was not terrorism-related, they said.
Three people were understood to be in a critical condition at the Alfred Hospital. Two others were in a serious condition.
Six people were taken to St Vincent's Hospital, another six to Royal Melbourne and five have been taken to the Royal Children's Hospital.
Acting Commander Stuart Bateson from Victoria Police said they believed the arrested man drove down the mall about 1.30pm (3.30pm NZT).
"We have the offender in custody. There is no further threat to the public at this stage," he said.
"We believe this male did some doughnuts at Flinders Street and Swanston Street, turned left into the Bourke Street Mall and deliberately drove into the crowd, continued along the footpath colliding with further pedestrians."
Photographs published by local media showed a stationary badly-damaged car with a nearby man in red underwear pinned to the ground by police.
Police closed Bourke St between William St and Swanston St, including the mall.
Incident said to be linked to earlier stabbing
Earlier this morning, police were searching for a man believed to be involved in a stabbing at Windsor.
Police were called to Raleigh St at 2.15am after receiving reports of two men fighting.
One of the men involved in the fight took himself to hospital with stab wounds and was in a serious condition.
Police were searching for the other man. They said the two men were related.
ABC Radio Melbourne's Raf Epstein said he understood the man had driven to Yarraville, in the city's west.
Police said the man later took a woman, who he knew, hostage in his car. She managed to escape as it was travelling over the Bolte Bridge.
Mohammed Minhaz said he saw three people hit by a car when he was waiting at the corner of Bourke St and Queen St.
"I saw a red car coming from the sidewalk hitting people. He just was driving, he didn't stop for anyone. The people were flying," he said.
Mr Minhaz said he saw the car drive up on the footpath then onto a pedestrian crossing.
"He hit one person on the footpath," he said.
'Our priority ... is with the injured'
Acting Commander Bateson said the incident was not terrorism-related and asked people to avoid the city this afternoon and overnight.
"It is going to take us a really long time to process this scene. Our priority at the moment is with the injured, and it must be that we give them our attention."
Armed police wearing bullet-proof vests and helmets were seen moving through the area, along with uniformed and plain-clothed officers.
There were also a number of ambulances and paramedics dotted throughout the streets.
One witness, Laura, said she saw a car being driven recklessly near Flinders Street Station.
"People were trying to stop this man who was driving around and around and he was half hanging outside the car," she said.
A shop video showed several people diving into a convenience store as the car sped along the footpath.
Another witness said they saw a car doing a burnout before it drove onto the footpath.
Witness Maria Kitjapanon told Melbourne's Age newspaper that the car was rammed by a police car and that police fired shots into the car before pulling the driver out.
"There were probably 10 police surrounding that guy's car, with guns drawn, and they fired into the car. Then they dragged someone out via the passenger's side, then all 10 of them sat on top of him," she said.
Police said the situation had been contained and asked people to avoid the area.
Melbourne is currently hosting the Australian Open tennis grand slam and is packed with thousands of extra tourists, only a few blocks from where the incident occurred.
The police said the tennis tournament continued to operate as normal.
Australia has been on heightened alert for attacks by home-grown radicals since 2014 and authorities have said they have thwarted a number of plots.
- ABC / Reuters