A gunman yesterday shot dead two female police officers with their own weapons before killing a bystander in a brazen suspected terror attack in Belgium, briefly taking a hostage at a school before being killed by police.

The carnage in the gritty eastern industrial city of Liege began around 10:30 am when the attacker armed with a knife repeatedly stabbed the two officers before using their own firearms to kill them, prosecutors said.

Federal prosecutors said they had launched a terror investigation into the incident, which comes as Belgium remains on high alert after a string of attacks including twin suicide bombings in Brussels in 2016 claimed by the Islamic State group.

"Armed with a knife, the suspect followed and attacked two police officers, and used their own firearms to kill them," prosecutor Philippe Dulieu told a news conference.

"He continued on foot, attacking a parked vehicle where he opened fire on a 22-year-old man in the passenger seat. The young man died.

"He then continued and entered the Leonie de Waha school. He took a woman working there as hostage. Police intervened, he came out firing on the police officers, wounding several before he was killed."

Eric Van Der Sypt, spokesman for the Belgian federal prosecutor's office, told AFP there were "elements that point in the direction that this is a terrorist act", while police confirmed that both officers killed in the attack were women.

According to Belgian broadcaster RTBF, the shooter was released from prison on Monday and was only known for minor infractions with no known links to extremism.

Liege, a major city in Belgium's former industrial heartland, was the scene of another bloody shootout in 2011 when a former convict armed with grenades and an automatic rifle killed six people and wounded more than 120.

COWARDLY VIOLENCE

Prime Minister Charles Michel denounced what he called "cowardly and blind violence".

"All our support for the victims and their loved ones. We are following the situation with the security services and the crisis centre," Michel tweeted.

There was support from other European countries, with French President Emmanuel Macron condemning the incident as a "terrible attack" and expressing the "solidarity of the French people".

British Prime Minister Theresa May said the UK "stands resolute with our Belgian allies against terror".

Belgian Interior Minister Jan Jambon said Belgium's Federal Crisis Centre was monitoring the situation.

"Our thoughts are with the victims of this horrible act. We are in the process of establishing an overview of exactly what happened," Jambon wrote on Twitter.

A major security cordon was set up around the area, while panicked parents came to collect their children from the school complex.

The governor of Liege province said all the children and staff were safe and unhurt.

"All the children are fine, those of the primary and kindergarten saw nothing, they were evacuated through the back of the school," Julie Fernandez, mother of a 7-year-old child at the school, told AFP.

"They were cared for by staff and psychologists and high school students were cared for in a nearby park," added Fernandez, who is also an MP.

TERROR ALERT

Belgium has been on high alert since the smashing of a terror cell in the town of Verviers in January 2015 that was planning an attack on police.

The cell also had links to Abdelhamid Abaaoud, the mastermind of the November 2015 Islamic State attacks on Paris that killed 130 people.

Belgium further raised its terror alert level after the Paris attack and placed the capital Brussels on lockdown for a week.

The country was then hit by its own IS suicide attacks on Brussels airport and a metro station, which killed 32 people in March 2016.

In August that same year, a machete-wielding man shouting "Allahu Akbar" (God is greatest) attacked two policewomen in the industrial town of Charleroi before being shot dead.