One Dead, One Injured In Sydney CBD Rampage

A man has been arrested after a daylight stabbing in Sydney's CBD, where ordinary citizens chased and restrained the man with chairs and a milk crate.

One woman, aged 41, has been stabbed and a man has been arrested after what police called "terrifying carnage" in the Sydney CBD.

A 24-year-old woman was found dead just one city block from where the injured woman was found around 3.15pm on Tuesday, with police investigating the links between that person's death and the stabbing.

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The suspect has been identified as Mert Ney, a 20-year-old man said to have a history of mental health issues. He is believed to be of Turkish background and living in western Sydney. Police raided the man's home on Tuesday evening.

Police say all indications are that the man was a "lone actor" with "no apparent links" to terrorist organisations so far identified.

"It is not currently classed as a terrorist incident. As the investigation continues, we will reassess that," NSW Police Commissioner Mick Fuller said, adding "there is no information we are looking for any other offenders".

"He is, by definition at the moment, a lone actor. Information was found on him that would suggest he has some ideologies in relation to terrorism but he has no links to terrorism, there is no current intelligence on this individual and he has no apparent links to other terrorist organisations."

"His history at the moment is unremarkable, compared to the gravity of the crimes."

"At this stage, I know he has a strong history of mental health, certainly much stronger than his connection with the NSW Police Force."

NSW Police said they received reports of a man walking along York Street with a knife around 2pm. Photos from witnesses appear to show a man carrying a large kitchen knife. En route to the location, police received further reports that a woman had been stabbed.

READ MORE: 'Hero' Bystanders Risk Lives To Stop CBD Stabber

She was found inside a hotel, with stab injuries to her back and has been taken to hospital in a stable condition, after what NSW Police Superintendent Gavin Wood called an "unprovoked" attack.

Photo: Twitter/Ayusha77

Wood added that one stabbing was confirmed but alleged the man attempted to stab a number of other people before being restrained. The man -- who appeared to be a young man, with brown hair, wearing jeans and a shirt -- has been arrested and taken into custody.

"It is believed there is no further threat to public safety," police said.

A witness, who was having lunch directly across from where the incident took place near the corners of King and Clarence Street, said he saw "a lot of people running".

"Really scary stuff, thought gunman or something crazy," Jack told 10 daily.

"I ran outside and saw people grabbing poles and bats from a fire truck and started to chase [the man] up the street."

Video from the scene showed passersby chasing the man, armed with chairs, as he ran through traffic and leaped onto a car roof. The man was later restrained on the ground by several citizens, under a chair and a milk crate.

"You dog... you stabbed a chick, mate," one of the men yelled at the suspect.

Superintendent Wood called those who assisted "heroes".

"I want to acknowledge those members of the public who got involved. They were brave and I can only use that word seriously," he said.

"They were significantly brave people. To approach a person with a mindset of obviously what this person did, with clear evidence of a stabbing previously, these people are heroes."

"A number of crime scenes have been established and a number of road closures are in place, which is believed to have significant impact on traffic and public transport this afternoon," police said in a statement.

Prime Minister Scott Morrison also praised those who intervened to chase and restrain the suspect.

"Our thoughts are with all those who have been impacted by this violent attack," he tweeted.

Labor leader Anthony Albanese also praised "the amazingly brave bystanders".

"Very scary visuals. The fact people were putting their own lives on the line by taking action, was an act of incredible bravery and I certainly pay tribute to them," he told 10 News First.

"Certainly this was a scary incident."

Video captured at the scene showed a man in a grey top being escorted by multiple police.

Anthony Albanese Responds To Sydney Stabbing

King Street is closed to traffic between Clarence and York Street with motorists also urged to avoid the area.

Buses are also diverting away from King Street and are using Clarence Street, Market Street, Kent Street and Erskine Street then returning to Clarence Street.

A spokesperson for NSW Fire and Rescue said fire crews were assisting with a police operation in the city.

More to come.