Victoria state police said they had arrested the driver of a car after it "collided with a number of pedestrians" in downtown Melbourne.
Paramedics were "treating and transporting to hospital 12 people", with some seriously injured, Ambulance Victoria added.
Sky News Australia reported that a pre-school child with a head injury was taken to hospital in a serious condition.
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A witness, Sue, told Melbourne radio station 3AW that she heard screams before she saw "people flying everywhere".
"We could hear this noise, as we looked left, we saw this white car, it just mowed everybody down," she said.
"People are flying everywhere. We heard thump, thump. People are running everywhere."
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