Australia, a staunch ally of the United States and its escalating action against the Islamic State in Syria and Iraq, is on high alert for attacks by home-grown militants returning from fighting in the Middle East.
Security has been tightened at public places, including Parliament House in Canberra where police are armed with assault rifles, and at major sports events.
The 18-year-old, named in parliament as Abdul Numan Haider, was asked to attend a police station in the southern state of Victoria on Tuesday night because his behaviour was "causing concern", police said.
"This was a planned and agreed meeting that was to occur at the Endeavour Hills police station. When these two police officers approached him, they were stabbed, one very seriously," Victoria Police Chief Commissioner Ken Lay told reporters on Wednesday.
"One of the injured police discharged his firearm, fatally wounding the 18-year-old."                

Police said the man, who had his passport suspended about a week ago, had apparently displayed a flag linked to the militant group the Islamic State at a local shopping mall and had been "of interest" to police for months.
Local media reported he was of Afghan origin and that he had been shouting insults about Prime Minister Tony Abbott and the government before he was shot. The Australian Broadcasting Corp said Haider had links to al-Furqan, a radical Muslim group in Melbourne that was raided by authorities in 2012.
"I can advise that the person in question was a known terror suspect who was a person of interest to law enforcement and intelligence agencies," Justice Minister Michael Keenan told reporters.
Both officers were in a stable condition in hospital on Wednesday, with one undergoing surgery after he was stabbed in the head, stomach and neck.
Earlier this week, Abbott warned Australians the balance between freedom and security "may have to shift", as he outlined broad new powers to crack down on suspected militant activity.
"Obviously, this indicates that there are people in our community who are capable of very extreme acts," Abbott said from Hawaii, where he was en route to New York for a meeting of the U.N. Security Council which is expected to address the issue of foreign fighters.

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