The family of a popular Melbourne restaurateur who was killed in the Bourke Street terror attack has been offered a state funeral as the city continues to mourn the tragedy.
Hundreds of flowers and cards line the footpath outside of Pellegrini's restaurant as staff let mourners know the tributes would be passed on to the family of Sisto Malaspina.
The 74-year-old man was walking down Bourke Street, just a few hundred metres from the business he had run for more than 40 years, when he was caught up in the horrific attack.
On Sunday afternoon Premier Daniel Andrews spoke to the family of Mr Malaspina and offered a state funeral. The family have not made a decision as of Sunday evening.
Tasmanian businessman Rod Patterson and a 24-year-old security guard were also injured in the attack.
Despite the shocking event the Victorian premier said the "act of evil" was not enough to change the heart of the city with a "proportionate response" needed to combat terror.
"We will do, and have done everything possible, to keep Victorians safe from an infrastructure point of view. But we are not going to fundamentally change the way the city works, for instance, running trams," Mr Andrews said on Sunday.
He stopped short of calling for drastic safety measures, preferring a "proportionate response to a very real threat".
Mr Andrews spoke to Mr Morrison after his comments to say he'd "struck the right balance".
Home Affairs Minister Peter Dutton has backed authorities even though a man known to them was responsible for the attack.
He said police and intelligence services have 400 open investigations at the moment and need a tip-off or advice from the public to stop someone acting spontaneously.
Hassan Khalif Shire Ali, a 30-year-old known to authorities for his radical views, parked a four-wheel drive laden with gas cylinders on Bourke Street on Friday and stabbed three men, killing one.
However the family of the attacker have said the man had mental health problems in a note to reporters.
"Hassan suffered from mental illness for years and refused help. He's been deteriorating these past few months," a note given to Nine News showed.
"Please stop turning this into a political game. This isn't a guy who had any connections with terrorism but was simply crying for help," it read.
Shire Ali was shot in the chest by a police officer he had threatened with a knife and died in hospital.
Federal police said the attacker had his passport cancelled in 2015 amid fears the Somali-born man would go to Syria.
It was believed he was inspired by Islamic State rather than having direct links with the organisation.
