A knife attack during a service at an Assyrian church in Sydney was a terrorist act motivated by suspected religious extremism, Australian police said on Tuesday.

At least four people were wounded in the attack, including Bishop Mar Mari Emmanuel of the Assyrian Christ The Good Shepherd Church, during a service live streamed at the western Sydney suburb of Wakeley on Monday.

The incident triggered clashes between angry crowds and police outside the church.

Police arrested a male teenager at the scene on Monday and were forced to hold him at the church for his own safety after a crowd gathered outside and demanded the attacker be brought out.

"We believe there are elements that are satisfied in terms of religious motivated extremism," New South Wales state Police Commissioner Karen Webb said during a press conference.

The bishop, whose live-streamed sermons attract a global audience, was speaking during an evening service on Monday when a man lunged at him with a knife, according to video footage.

It was the second major stabbing attack in just three days in Australia's most populous city after six people were killed in a knife attack at a beachside mall in the Bondi area on Saturday.

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