Police are investigating whether a fatal siege in the foyer of a Brighton apartment block was terror-related after Seven News received a chilling phone call from the address.
The siege, which left two men dead, ended in a shootout with three police officers injured and a female hostage rescued from a Melbourne apartment building.
Police shot the gunman dead after discovering the body of another man in the foyer of an apartment building in Brighton when the siege began at about 4pm on Monday.
Victoria Police Deputy Commissioner Andrew Crisp said the gunman, who has not been officially identified as yet, left the building about 6pm and opened fire on police officers, hitting three of them.
They returned fire and killed him - two police officers were taken to hospital, while another was treated at the scene. Police have said their injuries are not life-threatening.
Seven News in Melbourne received a phone call from a man who said: "This is for IS. This is for Al-Qaeda" shortly before the shootout.
The Herald Sun has reported the gunman was known to counter-terrorism police.
But the police would not confirm this at a press conference on Monday evening and said he had not been officially identified.
"Terrorism is one line of inquiry in relation to this matter. It is early days," Deputy Commissioner Crisp told reporters.
"We are extremely concerned about terrorism. Whenever there is any incident overseas it causes us to question what major events we have running... we are very attuned to the threat of terrorism here in Melbourne."
Police were originally called to the Buckingham Serviced Apartments in Bay Street around 4pm in response to reports of an explosion.
When they got there they found a man's body in the foyer, and he appeared to have been shot dead.
Police then attempted to negotiate with the gunman in one of the apartments.
About 5.41pm when the 7 News Melbourne newsroom received calls from a stressed-sounding woman who said she was involved in a hostage situation.
A man then got on the phone and said the siege was for IS.
When he was asked for more information he hung up.
Seven News then called the police and passed on the details and the man's phone number.
Deputy Commissioner Crisp did not go into details about the phone call in the press conference.
Seven News only reported on the phone call after the siege was resolved.
The woman who had been taken hostage was rescued from the apartment and "is safe and well" with investigators, Deputy Commissioner Crisp said.
Her relationship to the gunman is unknown.
Deputy Commissioner Crisp said police also received a triple zero call from a woman about the hostage situation.
He said he wasn’t sure whether the man was a permanent resident of the unit building.
When asked about a package found on the property, Deputy Commissioner Crisp said police had "specialist resources" on site along with a "bomb response unit".
"And they are doing what they need to do to clear the scene," he said.
There were about 20 shots fired in total during the incident.
The man who was killed before the standoff is believed to have been employed at the unit complex.
Deputy Commissioner Crisp said police now believe that there was no explosion, only gunfire.
Some witnesses reported hearing sustained machine gun fire for several seconds at 6pm.
People were evacuated from a swimming school opposite the apartment, while others stayed inside their apartments.