The lone terrorist who fatally stabbed a man in Bourke Street on Friday planned to cause an explosion in Melbourne by igniting gas cylinders in his car, police say.
On Friday afternoon, 30-year-old Hassan Khalif Shire Ali pulled up in his four-wheel drive, which caught fire.
Shire Ali stabbed three men, with a man in his 60s dying at the scene and two others recovering in Royal Melbourne Hospital.
Police and civilians tried to subdue Shire Ali before police shot him in the chest. He died in hospital.
Police have also confirmed they have spoken to Shire Ali's wife and that she is not missing.
They also confirmed in a statement that joint counter terrorism team investigators were executing search warrants at two addresses in Werribee and Meadows Heights on Saturday morning.
Speaking on the Today Show on Saturday morning, he said Shire Ali's car contained gas cylinders and it is believed he intended to cause an explosion.
Police are confident the event was a terrorist attack, which Islamic State has claimed responsibility for.
"It looks like he's attempted to ignite a fire in the car, we believe at this stage with a view to igniting those canisters with some sort of explosion, but that didn't eventuate," Commissioner Ashton says.
He says Shire Ali was known to police and federal intelligence authority ASIO.
"He's someone that was known to us," he says.
"But he wasn't someone we were actively monitoring to that level."
When asked if police should have shot Shire Ali in the leg rather than the chest, Commissioner Ashton said police were trained to kill if they believed their life or a member of the public's life was at risk.
"We don't train people to wound people with firearms," he says.
"You're trained to shoot to kill, not to shoot to wound."
He says police have worked through the night and don't believe there are any ongoing threats to the public.
Commissioner Ashton also says there is no suggestion that Shire Ali was inspired by James "Dimitrious" Gargasoulas, who is currently on trial facing six charges of murder after allegedly mowing down pedestrians in January 2017.
Islamic State has claimed responsibility for the attack.
Commissioner Ashton says Shire Ali had a criminal history for cannabis use, theft and driving offences.
The bomb squad was called after the barbecue-style gas cylinders were found in the vehicle.
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.
Police confirmed Shire Ali's name and age on Saturday morning after incorrect information was circulated through media reports.
Australian Associated Press