One dead in stabbing rampage in Melbourne

One person was killed and two others were injured in a rush hour stabbing rampage in downtown Melbourne Friday, that saw police shoot a knife-wielding suspect near a burning vehicle.

Media showed video footage of police then trying to restrain a large man in a dark tunic who was lunging, slashing and stabbing wildly at two officers as a pick-up truck burned nearby.

The officers were seen trying for at least a minute to detain the man peaceably as his attacks on them continued, before one office shot him with a weapon.

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

A map shows the location of the fatal stabbing in Melbourne AFP

He said another person died at the scene and two others are still being treated.

"There is no known link to terrorism at this stage," Clayton said. "We will keep an open mind as to whether there is any link. It's very early stage of the investigation."

Police warned people to avoid the area and dispatched the bomb squad to secure the area and examine the burning car.

Officers said they "are not looking for anyone further at this early stage."

"The exact circumstances are yet to be determined at this stage. The area has been cordoned off," police said.

"Anyone with information or who witnessed the incident is asked to go to Melbourne West Police Station to make a statement. We will provide further information when it comes to hand"

The apparent attack came as a 28-year-old James Gargasoulas underwent trial in Melbourne for driving into a crowd in the same area in 2017, killing six people.