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Australian police are treating as a “terrorist incident” a Melbourne siege in which a gunman was killed.

Heavily armed officers arrived at an apartment building on Monday after reports of an explosion and found one man already dead in the foyer.

Another man, Yacqub Khayre, was armed with a shotgun and holding a woman inside the building against her will.

Khayre, 29, called a broadcaster during the siege to say he was acting in the name of the Islamic State (IS) group.

Authorities were investigating whether Khayre, a Somali-born Australian citizen, may have lured officers to the wealthy suburb of Brighton with the aim of confronting them.

Mr Ashton said comments Khayre made referencing IS and al-Qaeda had prompted the terrorism investigation.B

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