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FILE PHOTO - Australian police stand at the site of a siege at the Buckingham Serviced Apartments in Melbourne, Australia, June 6, 2017. AAP/Julian Smith/via REUTERS

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SYDNEY (Reuters) - Australian police said on Monday a 25-year-old man had been arrested and charged with allegedly supplying a firearm used in a deadly siege in Melbourne last week, which Prime Minister Malcolm Turnbull called an "act of terrorism".

Victoria state police said in a statement on their website that the man faced four charges, including possessing a firearm unlawfully and committing an offence while on bail. He was set to appear in court on June 14.

The deadly siege took place on June 6 in Australia's second-largest city, with police shooting dead gunman Yacqub Khayre after he killed a man in the foyer of an apartment block and held a woman hostage inside.

Turnbull said police were treating the siege as an "act of terrorism" after a claim by the Islamic State group that one of its fighters was the gunman responsible.

Australia, a staunch ally of the United States and its action against the Islamic State militant group in Syria and Iraq, is on high alert for attacks by sympathisers of the radical group and from home-grown militants returning from fighting in the Middle East.

The 2014 Lindt cafe siege in Sydney, in which the hostage-taker and two people were killed, was Australia's most deadly violence inspired by Islamic State militants.

Several people were held hostage for more than 17 hours in the cafe by a gunman who was on bail after being charged with sexual assault and being an accessory to murder.

In inquiry into the Lindt siege last month found that police failed to respond quickly enough and last week New South Wales state premier announced that police would be allowed to shoot suspects in "terrorist related" incidents even if the attacker does not pose an imminent threat.

Australia has also signalled a drive to reform parole laws as a result of the Melbourne siege, including a ban on parole for violent offenders who have any links to extremism, as Khayre was on parole for a violent break-and-enter offence.

(Reporting by Charlotte Greenfield and Ana Nicolaci da Costa; Editing by Michael Perry)

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