Police in Melbourne shot a man dead and three officers were injured after a hostage scene at an apartment block in the city's Bayside suburbs.
The deadly stand-off began shortly after 4.00pm when emergency services responded to reports of an explosion in Bay Street.
A man's body was found in the foyer of an apartment block - police believe he had been shot.
Specialist police then attempted to negotiate with another man who was holding a woman hostage.
"A man has been shot dead by police in the Bay Street apartment complex shortly before 6.00," police said following the siege.
"Police have safely rescued a woman who was being held against her will in the apartment block."
Police are investigating whether the incident is terrorism related.
Just after 6.00pm witnesses reported hearing a volley of gunshots and police urged pedestrians to take cover in a nearby supermarket.
Roads in the area are cordoned off.
Shortly before 6.00pm a witness told ABC Radio Melbourne that traffic in the area was heavy as a result of police diversions.
"I saw a couple of police hiding behind letterboxes and one also sort of bobbing behind one of their police cars," Kate said.
"It didn't look too good and all the streets are closed off around the area."