A British backpacker has been stabbed to death in Australia in what police say could be a terror attack.

The 21-year-old woman died outside a hostel in Queensland while a 30-year-old British man is in a critical condition after being attacked.

A dog that lived at the hostel was also stabbed to death, while a 46-year-old local resident suffered non-life threatening injuries.

The suspected attacker - a French tourist - yelled "Allahu Akbar" (God is greatest) during the attack and as he was arrested, Queensland Police said.

Deputy Commissioner Steve Gollschewski said the attacker, aged 29, had been taken to hospital after suffering injuries in the attack.

He told a press conference the suspect - understood to have arrived in the country in March - appeared to have been acting alone.

"It is alleged that the suspect used the phrase Allahu Akbar during the attack and when arrested by police.

"We are not ruling out any motivations at this stage, whether they be political or criminal.

"Investigators will also consider whether mental health or drug misuse are factors in this incident."

Queensland Police tweeted the incident was an "act of senseless violence".

It added: "Our thoughts and condolences are with the families and loved ones of those involved in the incident."

A Foreign Office spokesman said: "We are working with local authorities and providing support to the families of a British national who was killed and another critically injured in an incident in Australia.

"Our thoughts are with the family at this difficult time."