The federal government has confirmed a teenager shot after he stabbed two police officers was a known terror suspect.

Justice Minister Michael Keenan has confirmed a teenager shot in Melbourne was a known terror suspect.

He called for calm and for people to let police and security agencies continue with their work.

The 18-year-old Narre Warren man, who police believe may have previously displayed an ISIS flag, met the officers outside Endeavour Hills police station on the city’s outskirts on Tuesday night.

He then stabbed one, an AFP officer, a number of times, before twice stabbing a Victorian officer in the forearm.

“The person in question was a known terror suspect who was a person of interest to law enforcement and intelligence agencies,” Mr Keenan told reporters in Canberra on Wednesday.

It appeared the shooting was in self-defence, he said.

“Whilst this is a horrible incident we do need to remain calm and go about our daily lives,” the minister said.

“The police are our front line against people who wish to do us harm and it is exactly this type of bravery and dedication shown by these officers that will continue to keep our communities safe and secure.”

Mr Keenan has been updating Prime Minister Tony Abbott about the incident while the leader travels to New York for a United Nations Security Council meeting.

He also briefed the opposition.

The federal Labor MP for Holt, where the shooting took place, said his community was shocked and horrified by the incident.

Anthony Byrne said the conflict in the Middle East was having a bearing “literally at my community’s doorstep”.

Tuesday’s attack at the Endeavour Hills police station was proof that lifting the terror threat level was justified, he said.

“This threat is significant. This threat is real,” Mr Byrne told reporters in Canberra.

“It shows why we need to remain vigilant to keep our community safe.”

Shadow attorney-general Mark Dreyfus said the Melbourne shooting was concerning.

“Our thoughts go out to both officers who were involved in what was a terrible incident,” he told reporters in Canberra.

Greens MP Adam Bandt asked whether Australia’s deployment to the Middle East was making Australia less safe.

“We have to ask the serious question what is it that makes someone, a teenager, so disaffected with their own country that they want to kill people,” he told reporters in Canberra.

“Is going over there and bombing them going to help change their minds? Many have argued it won’t.”

Labor frontbencher Jason Clare, previously a home affairs minister, said the events showed how ISIL acted as a lightning rod.

Liberal Democrat senator David Leyonhjelm said the tragedy highlighted existing laws against attacking police officers.

He argued the counter-terrorism measures before parliament would not have changed anything about the incident.

Independent senator Nick Xenophon called for “cool heads” and some perspective.

“This was by all accounts an isolated incident,” he said.

Greens leader Christine Milne said Australians should stay calm.

“People are feeling anxious (and) scared because of the hyped up atmosphere that’s permeating everybody’s dinner table,” she said.