Melbourne stabbing attacker identified as Hassan Khalif Shire Ali from Somalia

Victoria Police Saturday identified the man, who set a car on fire and stabbed three people, killing one of them, before being fatally shot in the Australian city of Melbourne, as Hassan Khalif Shire Ali from Somalia.

The police said it has executed search warrants in two properties and spoke to Ali's wife as part of the investigation.

Ali, who was driving a ute, loaded with gas bottles, into the Bourke Street, allegedly set it alight and began stabbing members of the public Friday.

He was shot by police as he lunged towards them with a knife. He later died in a hospital.

Victoria Police Chief Commissioner Graham Ashton confirmed Ali died in the hospital after being shot by police.

One man, who is yet to be formally identified, died at the scene after the stabbing. A 26-year-old man was in a stable condition in the Royal Melbourne Hospital, while a 58-year-old also remains in hospital with non-life threatening injuries.

Police were treating the attack as terror-related at this stage, and counter-terrorism investigations were continuing into Ali's background.

Ashton said he believed the suspect moved to Australia from Somalia in 1990s, and that his family members have been known to police on terrorism-related matters.

On Saturday, the Joint Counter Terrorism Team began executing search warrants on two homes in Werribee and Meadow Heights.

Ashton said police had spoken to Shire Ali's wife.

He further said Ali was was the brother of a man arrested in relation to committing acts in preparation for a terrorist attack.

"He is known to both Victoria Police and federal intelligence authorities," Ashton said, adding that ''there is no ongoing threat that we know of ... as I speak to you.''