After shooting and killing a staff member when he arrived, Khayre then held the woman hostage for several hours before he burst out of the building and engaged police in a firefight, during which he was killed.
One police officer was shot in the neck and ear and two officers suffered wounds to their hands, but none of the wounds was life-threatening, Ashton said.
Victoria state Police Commissioner Graham Ashton said police were still investigating after Islamic State claimed responsibility for the attack via its Amaq news agency.
‘There have been too many cases of people on parole committing violent offences of this kind, ‘ the prime minister told reporters in Canberra on Tuesday.
“What is clear here is that we face a growing threat from Islamist terrorism in Australia in our region and around the world”.
Yacqub Khayre also was acquitted of a Sydney terror plot in 2010 and police say the violence he carried out in Melbourne was considered an act of terror.
The home the Melbourne siege gunman shared with his mother has been raided by police who at this stage believe he was acting alone.
Another man was reportedly found dead in the premises of the apartment, local media reports said.
It was at that exact moment that Somali-born refugee Yacqub Khayre, 29, emerged from his hideout and opened fire on waiting police, injuring three before he was shot dead. The woman, in her 20s, was not harmed.
Three police officers were hurt in a stand-off lasting more than an hour at an apartment building in the beachside suburb of Brighton, police said in a statement.
Ashton said police did not regard ISIS’ claim of responsibility as evidence that the violence was planned.
In 2009, Khayre was involved in a suicide bombing plot targeting an army base.
“This terrorist attack by a known criminal, a man who was only recently released on parole, is a shocking, cowardly crime, ” he said.
“He appears to (have been) in the wrong place at the wrong time”, Comm Ashton said.
Police were called to the scene after emergency calls reported loud bangs or explosions, Crisp said, adding no detonations had been confirmed.
Victorian Police Association secretary Wayne Gatt said the injured officers will require rehabilitation.
BREAKING: Hostage situation unfolding in Brighton, heavily armed police surrounded an apartment building.
Prime Minister Malcolm Turnbull assailed the attack during a news conference Tuesday.
He also raised concern over granting parole to Khayre.
Since November, Khayre had been on parole after serving jail time for a violent 2012 home invasion.
Islamic State has claimed responsibility for Monday’s incident, that left an employee of the Brighton serviced apartments where the siege occurred dead.