Earlier, a man stabbed a woman and attempted to stab several other people in central Sydney Tuesday before being pinned down by members of the public and detained by police, eyewitnesses and officials said.
Police subsequently discovered the body of a 21-year-old woman at a Clarence Street apartment.
Before police could arrive, the man tried to stab more people in the street, Wood said.
He is slashing a big butchers knife through the air, trying to keep a man with a milk crate at bay.
Fuller said the assailant had a "history of mental health". They not only saved lives, but they made sure this lunatic will get what's coming to him ... we hope.
"They were fearless. significantly courageous people", he said.
"The threat to the community has been negated".
"Those are significantly fearless people", New South Wales Police Superintendent Gavin Wood said at a press conference Tuesday.
Mr Vaux said the patrons at the cafe the man ran past quickly realised they needed to help apprehend the man, pinning him down with chairs and a crate.
Video footage from the scene shows a number of men in pursuit of the alleged knifeman.
New South Wales Police Commissioner Mick Fuller added that the stabbing is "not now classed as a terror incident".
The radical-Islamist chant might have been a tactic created to get police to open fire, a tactic thwarted by the four sharp-thinking men in Sydney.
"I ran outside and saw people grabbing poles and bats from a fire truck and started to chase [the man] up the street", an eyewitness told 10 daily.
Major roads have been blocked off, and the main entrance to Wynyard Station has been closed as police investigate the stabbing of one woman, and death of a second.
O'Shaughnessy, who once turned out for struggling League One outfit Bury, was among those to approach the man in question and subdue the blood-covered attacker.
One video shows him being pinned to the ground by members of the public while another showed him being led away by police.
An eye witness caught Ney jumping on a auto and yelling "Allahu Akbar" and "shoot me" after the fell off the moving vehicle.
The alleged offender has been named as Mert Ney, a 21-year-old man believed to be of Turkish descent.
The woman's body was found after the man was arrested. She was found in a unit block above Clarence St Cyclery, which was forced to close after police set up a crime scene in front and behind the shop.
"He had blood on the knife and there was blood all over his clothing, so hopefully no-one was [badly] injured, fingers crossed it wasn't serious".
State police minister David Elliott also praised the people who restrained the man.
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