Australian Police Shoot Dead 'Known Terror Suspect'

Police have shot dead a "known terror suspect" who stabbed two officers, a day after the Islamic State group called for Muslims to indiscriminately kill Australians, officials said Wednesday.

The 18-year-old, reportedly associated with the Islamic group Al-Furqan, was killed on Tuesday evening, having arrived at a police station on the outskirts of Melbourne to attend a "routine" interview.

He was met by two members of the Joint Counter Terrorism Team and greeted them with a handshake before pulling out a knife and repeatedly stabbing both men. One officer fired a single shot that killed him, police said.

"I can advise that the person in question was a known terror suspect who was a person of interest to law enforcement and intelligence agencies," Justice Minister Michael Keenan said on Wednesday, adding that the attack was unprovoked.

"The incident occurred during a police investigation and it appears that the shooting by the police officer was in self-defense."

Both police officers were in a stable condition after undergoing surgery.

The attack followed IS militants on Monday releasing a statement urging the indiscriminate killing of citizens of all countries taking part in the US-led coalition against the jihadists. Australia was singled out, along with the United States, Canada and France. 

Foreign Minister Julie Bishop said Canberra was treating the call as genuine, warning Australia was clearly a target of the extremist group which has declared a "caliphate" straddling Iraq and Syria.

Only last week, Australia carried out large-scale anti-terrorism raids in Sydney and Brisbane to disrupt an alleged plot by IS supporters to abduct and behead a member of the public.

The government believes up to 60 Australians are fighting alongside IS jihadists, while 20 have returned home and at least another 100 are actively working to support the movement at home.

- Need to remain calm -

Victoria state police chief Ken Lay said the teenager "had one thing on his mind, and that was to do the most amount of harm to these two people as he could".

"We were aware of this young man and had been for number of months. The fact that the joint counter-terrorism task force was doing work around him indicates our level of concern," he told Fairfax radio.

Lay confirmed the man's passport had been cancelled and that he had been seen with a flag ahead of the attack, reportedly of the Islamic State.

Reports said he had also made threats against Prime Minister Tony Abbott.

"It is true to say there was a flag involved, whether is was ISIL or not is not absolutely clear to me but there are some concerns about that issue," Lay said. 

The Australian Broadcasting Corporation said the 18-year-old's family was from Afghanistan and he had links with Al-Furqan in southeast Melbourne, a group that was targeted in terrorism raids by police in 2012.

Keenan said the public should not panic.

"Whilst this is a horrible incident we do need to remain calm and go about our daily lives," he said. 

Australia has deployed 600 troops to the United Arab Emirates to join the international coalition gearing up for a campaign to eradicate the jihadists.

It has also sent eight RAAF F/A18 combat aircraft.

So far Australia has only been involved in dropping humanitarian and military aid to Iraqis under siege. It has repeatedly ruled out any intervention on the ground.