A gunman who killed a man and took a woman hostage before dying in a police shoot-out had been acquitted of plotting a terror attack at a Sydney army base years earlier, Australian police said.
The Seven Network television said it had received a phone call from a distressed woman who said she was involved in a hostage situation.
ISIS has claimed responsibility for an incident on Monday near Melbourne, Australia where a gunman killed one and took a woman hostage for hours before being killed by police.
A woman was held hostage by a suspect who was later shot dead by police in a volley of gunfire in the apartment block. The terror attack left two men dead and three police officers injured. "It underlines the need for us to be constantly vigilant, never to be deterred, always defiant in the face of Islamist terrorism".
Victoria Police Chief Commissioner Graham Ashton said the incident was being treated as "an act of terrorism". The police raided a home where Khayre lived with his mother and initial reports show that he likely acted alone.
Ashton said Khayre was known to police and had a long criminal history.
'The government appears to be, as far as I can see, panicking about a system it's had two and a half years to fix, ' he told reporters at parliament.
Mr Ashton said there was nothing to indicate the man was planning an attack and said police were now trying to establish his motivation.
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Australia, a staunch ally of the United States and its escalating action against Islamic State in Syria and Iraq, has been on high alert for attacks by home-grown militants returning from fighting in the Middle East or their supporters.
ABC had reported that the Islamic state claimed responsibility for the siege through a published statement via Amaq news agency which is affiliated to the terror group.
Victoria Police said their advice from the corrections department was that Khayre qualified for parole and had been obeying the terms of his parole since November previous year.
"With every development in the sick pathology of terrorism, we have to learn from it, we must be more agile that those who seek to do us harm".
Khayre was released on parole late previous year after serving time for intent to cause injury and arson, which Turnbull said was a concern given his background and something that would be reviewed. AAP/Julian Smith/via REUTERS Police carry a bag outside the home of Yacqub Khayre at Roxburgh Park in Melbourne, Australia, June 6.
Turnbull said Khayre had been previously known to police, and had links to extremist organizations.
Melbourne gunman Yacqub Khayre was on parole at the time of Monday's attack in Brighton and it's understood he was part of an official deradicalisation program run by the Islamic Council of Victoria.
Khayre had been required to wear a satellite-positioning ankle bracelet as a condition of his parole.
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