ABC journalist Virginia Trioli witnessed the dramatic arrests by chance.
"There was yelling and vicious barking of dogs outside St Mary's church on Queensberry St and I saw counter terrorism police fully kitted out in camouflage and helmets and weapons that I've simply never seen before," Trioli said.
"There was one man on the ground and a woman kneeling on the opposite corner, very quiet and passive. There were plain clothes detectives and uniformed police and the bomb squad as well, and it was incredible to see on a leafy north Melbourne church corner.
"After a while they took the two away in white Hazmat suits."
Backpacker Axel Morel was across the road from the church and saw a man handcuffed and sitting against the church fence with an officer in camouflage gear holding a high powered gun standing beside him.
“It was weird. Strange. Really strange,” he said.
He said he saw police get the man to put on a white forensic suit.
A counter-terrorism officer stands guard over the arrested man.
Police remained at the Bedford Street apartment block about 300 metres away on Friday night.
Officers wearing forensic suits and could be seen from the street through the windows on the stairwell of the first floor.
Police focused on a first-floor apartment. It’s believed a man and a woman had been living there, residents said.
Officers were seen taking photographs inside.
Witnesses reported seeing police with guns drawn near the corner of Howard and Queensbury Streets shortly after 2pm.
Officers ordered the man to put on what appears to be a forensics suit.
Police earlier confirmed the operation in a statement.
"The Joint Counter Terrorism Team Melbourne can confirm it is conducting operational activity in North Melbourne.
The man is taken into custody outside St Mary's Anglican Church in North Melbourne.Credit:Nine News
"We can confirm two people are currently assisting with enquiries.
"There is no current or impending threat to the community. It would not be appropriate to comment further at this time."
Witnesses saw one man being detained by police outside the church, on the corner of Queensberry and Howard streets.
A man is arrested by counter-terror police in North Melbourne.Credit:Channel Nine
A resident of the Bedford Street building who had come downstairs to pick up his Deliveroo order said police were in the stairwell.
Police have arrested a man near St Mary's church in North MelbourneCredit:Nine News
It’s believed the man arrested outside the church was living in the building.
“It’s so scary,” said the resident, who did not want to use his name.
The Joint Counter Terrorism Team includes officers from Victoria Police and the Australian Federal Police.
Tammy Mills is a Crime Reporter for The Age.
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