Local reports say up to 14 people have been injured.
Paramedics have now transported 13 people to city hospitals. Two more people are being assessed by paramedics at the scene.
A four-year-old child with a head injury has been taken to the Royal Children’s Hospital in a serious condition.
Meanwhile one person has been taken to The Alfred Hospital – injuries and condition unknown.
Witnesses claim that a white SUV showed no signs of slowing down as it mowed down a number of people at the busy intersection at rush hour.
There are also reports that an officer on the scene described the incident as “terrorism” – but this has not been officially confirmed by authorities.
A witness at the scene said she heard screams before she saw “people flying everywhere”.
She added: “We could hear this noise, as we looked left, we saw this white car, it just mowed everybody down.
“People are flying everywhere. We heard thump, thump. People are running everywhere.”
Footage of the scene shows crowds of people scattered around the white SUV.
Victoria Police are currently at the scene on Flinders Street between Elizabeth Street and Swanston Street.
A police spokesman said on Twitter: “Police are currently attending an incident on Flinders Street between Elizabeth and Swanston streets where a vehicle has collided with a number of pedestrians.
“Police have arrested the driver of the car.”
Earlier a statement by Victoria Ambulance said paramedics are assessing 12 people at the scene of the incident.
More to follow…