A 16-year-old boy is in custody on Tuesday after the attack at Christ the Good Shepherd Church in Wakeley, where Bishop Mar Mari Emmanuel was stabbed during a live-streamed sermon.

A priest from the Assyrian church was also injured after trying to intervene.

It was declared a terrorist act after early morning discussions involving the NSW Police commissioner, police minister and premier.

Commissioner Karen Webb said the teenager made comments indicating a religious motive.

"After consideration of all the material, I declared that it was a terrorist incident," she told reporters on Tuesday.

The teen allegedly planned the attack, travelling from a home that was not near the church before stabbing the bishop and priest.

"They're lucky to be alive," Ms Webb said.

Footage of the incident showed a person dressed in black stabbing the bishop at the altar as parishioners screamed and ran to his aid.

The teenager was known to police but was not on a terror watch list, Ms Webb said.

The weapon used has been described as a flick knife and detectives are also investigating if the boy lost fingers as part of the attack or during the subsequent unrest.

Prime Minister Anthony Albanese was briefed on the incident and the National Security Committee of Cabinet was due to meet later on Tuesday.

ASIO director-general Mike Burgess said the agency supported NSW Police declaring an act of terrorism, adding that the incident appeared to be religiously motivated.

"There's no indication anyone else is involved, but that remains an open investigation," he said.

The attack led to street violence near the church, where hundreds gathered as police tried to disperse the crowd and extract the teenager.

Multiple officers were injured and several vehicles were damaged in the hours-long melee, during which bricks, concrete and fence palings were used as improvised weapons to attack police.

A parallel investigation to the murder probe would investigate the riot and prosecute those responsible, Ms Webb said.

"Those that were involved in that riot can expect a knock at the door," she said.

About 30 people were treated over the course of several hours, including seven who were taken to hospital, NSW Ambulance said.

Mr Albanese said people should let police and security agencies do their job rather than taking the law into their own hands.

"It is not acceptable to impede and injure police doing their duty or to damage police vehicles in a way that we saw last night," he said.

Premier Chris Minns said faith leaders across western Sydney were denouncing the violence to quell any potential retaliatory attacks.

"Their message to their communities was universal and identical, and that is that they deplore violence in all forms ... and most importantly, that people remain calm during this obviously distressing period," he said.

The church said Bishop Emmanuel and a senior priest were in a stable condition and appealed for calm.

"We ask for your prayers at this time," the church said on social media.

The Assyrian church preaches a conservative version of Christianity distinct from other denominations popular in Australia.

Assyrian Christians living in the Middle East are a minority group and the population has shrunk since the rise of ISIS in Iraq a decade ago, according to Minority Rights Group.

Local mayor Frank Carbone, speaking at the church scene on Tuesday, said it was very concerning for the community that a 16-year-old boy was allegedly responsible for the attack.

"There has to be something wrong when that happens," he said.

The attack came two days after six people were killed and more than a dozen injured in an attack at the Westfield Bondi Junction shopping centre in Sydney's east.

The mass stabbing, carried out by a mentally ill Queensland man, shot dead at the scene, was not thought to be terror-related.

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Australian Associated Press