A major police operation is underway at the Bay Street apartment complex, after reports of the explosion at 4 p.m. (local time), reports the Australian Broadcasting Corporation.
The police also found the body of a man in the building and said it appeared that he was shot dead in the foyer area.
A Victoria state police spokesperson said officers were trying to negotiate with a man in one of the apartments.
"Victoria Police specialist units are currently on scene. Roads are closed in the vicinity and we urge the community to avoid the area."
Just after 6 p.m., there was a volley of gunfire in the area and the police urged pedestrians in a nearby supermarket to take cover.
A witness told the Australian Broadcasting Corporation: "I saw a couple of policemen hiding behind letter-boxes and one also sort of bobbing behind one of their police cars."
"It didn't look too good and all the streets are closed off around the area."
(This story has not been edited by Social News XYZ staff and is auto-generated from a syndicated feed.)
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