A hero shopper uses a trolley to fight off a Somali terrorist who knifed one person to death in Melbourne today.

Dramatic footage shows the have-a-go-hero bravely confronting the terrorist with his makeshift weapon before a cop brings the rampage to an end by shooting and killing the knifeman.

Witnesses said the maniac's car "exploded" moments before he used a large blade to lunge at shoppers and cops in the city's busy Bourke Street at 4pm local time.

Terror cult ISIS have claimed responsibility for the attack on social media insisting the knifeman was an "Islamic State fighter."

Victoria Police commissioner Graham Ashton told reporters that the killer had links to terrorism and was known to both his force and federal investigators.

He said the terrorist, who moved to Australia from Somalia in the 1990s, was known authorities because of his "relatives".

Authorities confirmed that the radicalised attacker had gas cylinders in his car which was set alight before the knife rampage.

The attack is being treated as a terrorist incident and is being probed by counter terrorism cops, the official confirmed. Police have not yet released the identity of the attacker.

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What happened in the Melbourne terror attack on Bourke Street, who is the suspect and was it a terror attack?
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