Terrifying footage has emerged of the moment a man lunged at police with a knife in Melbourne's Bourke Street on Friday afternoon.
People also told local media that they saw police trying to calm down the attacker.
"(Officers) were confronted by a male brandishing a knife and threatening them", Supt Clayton said.
One person died and two others were injured after after being stabbed in Australia's Melbourne. Condition not yet known.
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).
Police officers at the scene on Bourke Street in Melbourne after a man attacked others with a knife.
A man wielding a knife was shot by police.
"Police initially responded to a report of a auto on fire. a man was arrested at the scene and has been taken to hospital under police guard in a critical condition", Victoria state police said in a statement.
No terrorist link has been made at this stage of the investigation, according to police.
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About 6pm, Victoria Police Superintendent David Clayton holds a press conference just metres from where the incident unfolded.
'The exact circumstances are yet to be determined at this stage.
Witnesses said police were at the scene within minutes.
Earlier, Ambulance Victoria said they had assessed three people at the scene.
An eyewitness said after the auto burst into flames, someone walked up to the alleged driver and was stabbed directly in the chest. They said they heard screams and cries from the crowd before they were rushed from the area.
Melbourne resident Meegan May tweeted: "Chaos in Bourkest as a guy seems to have set his vehicle on fire then attacking police with a knife". Police response was swift and overwhelming.
"I really wanted to help but I was in shock, I didn't know what to do". I heard at least one gunshot initially, ' one said.
James Gargasoulas is accused of deliberately crashing into pedestrians, killing six and injuring 27 others.