Video from the scene showed a man swinging a knife at two police officers near a burning auto before he was shot.
Authorities are praising members of the public who helped police take down a man who launched a deadly terror attack in Melbourne.
The man again attempted to stab and slash at the officers several times before one policeman unsuccessfully tried to taser him. his partner then shot the attacker in the chest.
Authorities have confirmed that the man is from Somalia and that he was known by local police and intelligence.
Witness footage showed police struggling for at least a minute to corral a large man wearing a dark tunic as he lunged, slashed and stabbed wildly at two officers.
The Australian Broadcasting Corp. said police were searching two Melbourne properties on Saturday in relation to the attack.
Victoria Police said a bomb response unit had been called to the area and was now making the scene safe.
Mr Morrison said he had long-standing relationships with the Muslim community and it was them who had raised with him concerns about radicalism in recent years.
Officials are treating the incident that brought Melbourne to a standstill during Friday afternoon rush hour as terrorism-related.
The area has been cordoned off and the public are urged to avoid the area.
Police officers who apprehended the suspect are being treated for cuts and scrapes and are not thought to be in a serious condition.
A 26-year-old man and a 58-year-old, said to be Tasmanian businessman Rod Patterson, were taken to hospital with what police said were non-life threatening injuries following the attack.
"Because he was on his stomach, they turned him over to see if he's all right, he was still alive", Markel Villasin, told Australian Associated Press.
"This is an evil and terrifying thing that happened in our city and state today, and we condemn it", he said.
James Gargasoulas is accused of deliberately crashing into pedestrians, killing six and injuring 27 others.