In the past, the Islamic State has claimed responsibility for some "lone wolf" attacks in which the assailant was later found to have no allegiance to the group.
Ashton said the police initially responded to calls about a four-wheel-drive utility vehicle on fire in the busy Bourke Street Mall shopping district at about 4:10 p.m. local time. While the full chain of events is yet to be established, it is reported that a man burned a vehicle before starting his knife attack.
Police said then they believed he was an ISIS sympathiser and was planning an attack Melbourne's central Federation Square on New Year's Eve in 2017. He died in hospital. The police made a courageous effort to talk him down while he slashed at them.
He reportedly shouted "Allahu Akbar" during the attack, but police have not confirmed the reports.
Police say Shire Ali was radicalised and inspired by IS. He moved to Australia in the '90s from Somalia, and had a record of "minor" offenses, including marijuana use, some driving offenses and theft.
Neighbours who live near the Werribee home said the Shire Ali family had lived there for more than 30 years.
They were hopeful his "situation would improve" after he married, but the imam said in recent weeks Shire Ali had given them fresh cause for alarm.
Khalif's passport was cancelled several years ago after he was noted as one of 300 potential security risks.
It was also noted police are unable to get in touch with the Khalif's wife, and believe she is both missing and radicalized.
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"There is no known link to terrorism at this stage", Clayton said.
"From what we know we are treating this as a terrorism incident", he said at a press conference.
A staunch US ally, Australia has been on alert for such violence after a Sydney cafe siege in 2014, and its intelligence agencies have stepped up scrutiny, though Ashton said there was no warning of the latest attack.
According to The Age, anti-terror police believe Ali had planned to set fire to three gas cylinders in the ute's rear tray. Some of those witnesses said he was stabbed in the face. Two other men, aged 26 and 58, are in a hospital with what police describe as non-life threatening injuries.
One listener said he could see a white sheet over a body.
In a series of tweets, Daniel Andrews, the premier of Victoria state, called the incident "an act of terror struck the heart of our city, in a place where past wounds have still not healed".
"Equally, those strangers, people who were by-standers who knew nobody involved, who stepped in without a moment's hesitation, to render support and assistance to the fearless members of the Victoria Police, they too are people whose qualities make all of us proud as well".
One of his victims sustained significant head injuries.
Police believe he meant to cause an explosion in the city centre, a plan that Chief Commissioner Graham Ashton said "wasn't sophisticated", with the auto catching fire but not exploding.
The attack on Bourke Street horrified hundreds of onlookers during the afternoon rush hour in Australia's second-biggest city.
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