Melbourne siege an act of terror, ISIS claims responsibility

Police call fatal Australian siege a terror attack

"Nothing we have found thus far suggests to us this was anything that was planned or done in concert with others", he said.

Large numbers of police soon arrived on the scene at about 4 p.m. local time, Ashton said, including counter-terrorism teams.

Yacqub Khayre stood trial over a suicide attack at the Holsworthy Barracks at the Victorian Supreme court in 2010.

Australian officials have grown increasingly concerned over the threat of extremist attacks.

Tightening of parole conditions is now likely to form the centrepiece of a meeting between Mr Turnbull and the state government leaders on Friday, as the Premier said Australians "need to be assured" that individuals who are "a threat to their safety" are not being released on parole.

However, the chairman of the Adult Parole Board said it was not informed Khayre was on a terror watch list.

Police returned fire and killed the man.

The dead man, a 36-year-old Chinese-born Australian believed to be named Nick Hao, was recently married and leaves behind a wife and child.

Ashton said it was possible Khayre had taken the woman hostage to try and lure as many police as possible to the apartment. They tried to negotiate with him before Khayre walked out of the building firing the shotgun.

The escort escaped unharmed but three police were wounded in the firefight, although their injuries were not life-threatening. "Police have safely rescued a woman who was being held against her will in the apartment block", police said. They found the receptionist's body in the foyer upon arrival.

Melbourne's Seven News are reporting that a staff member received a call from a man, thought to be the shooter, just before gunfire rang out on Bay Street.

After the deadly attack, the Islamic State (IS) claimed responsibility for the attack by that the gunman was one of its fighters.

IS published a statement via its Amaq propaganda arm, which said the attack in Melbourne was carried out by one of its "soldiers".

"There have been too many cases of people on parole committing violent offences of this kind", Mr Malcolm Turnbull told reporters. "We believe that calls (were) made by the individual inside the apartment", Ashton said.

Police are also investigating a report of a telephone call to a television station's newsroom saying the incident was related to Islamic State, he added.

'We'll look at that very closely, of course, and if there are any changes in any element of this act - which we're considering as an act of terror - then we stand ready to make them, ' Mr Andrews said of changes to parole.

The Islamic State (ISIS) terror group claimed responsibility for the violent incident.

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