According to police, the man behind this "terrifying carnage" had information related to terrorism ideology on him during the attack.

They described the moment they apprehended the suspect as being likely down to "instinct", with dramatic eyewitness footage appearing to show a young man being pinned to the floor with chairs and a milk crate.

The group of responders is also said to have included fellow Manchester man Lee Cuthbert.

The 41-year-old woman was taken to hospital in a stable condition with a stab wound to her back.

The body of a woman has been found inside an apartment in Sydney's CBD and detectives are working to establish if her death is linked to a nearby stabbing incident. Wood told the Morning Herald that "brave" citizens performed a citizen's arrest.

"It's an extraordinary response by the public and just demonstrates that people are prepared to do the right thing if called upon".

"I followed him up York Street trying to get him to focus on me rather than anyone else", he said.

The man was expected to be formally charged by police Wednesday.

Elsewhere, the body of a woman has been found at a unit on Clarence street.

A witness told reporters that the man was screaming comments about religion, before yelling to police that he wanted to be shot.

Police say that one woman was stabbed in the attack, and that there was then a "number of attempted stabbings by the same offender".

The man was allegedly waving a large knife and then jumped back down from the auto roof and into the middle of the road, shouting as his pursuers continued to close in.

The ABC understands the man escaped from a mental health facility and police confirmed he had a history of mental health problems.

"Officers from Sydney City Police Area Command, and various specialist police, are conducting proactive patrols the area, but it is believed there is no further threat to public safety".

"These people are heroes, and I want to acknowledge that". They are fearless, and I can only use that word seriously.

"It would appear at this stage it is unprovoked but we are keeping a very open mind as we move forward", police spokesperson superintendent Gavin Wood said, hailing the action of the bystanders.

In the video he is heard shouting "Shoot me, f-- shoot me in the f-- head, shoot me, I want to f-- die" before he is chased by an onlooker carrying a chair. At one point he climbs on the roof of a auto, yelling, as a man carrying a cafe chair seeks to corral him.

"To approach a person with a mindset of obviously what this person [had], with clear evidence of a stabbing previously, these people are heroes".

Once the crowd had pinned the knife-wielding man down, his arms and shirt covered in blood, others grappled to understand what was happening. And I must acknowledge that those people who got involved were courageous.

"They were significantly courageous people", New South Wales Police Superintendent Gavin Wood told reporters at the crime scene.