An attacker inspired by the Islamic State group stabbed six people at a New Zealand supermarket on Friday before police who had the man under surveillance shot him dead, Prime Minister Jacinda Ardern said.

Ardern said the man, a Sri Lankan national who arrived in New Zealand in 2011 and was on a terror watchlist, entered a shopping mall in suburban Auckland, seized a knife from a display and went on a stabbing spree.

She said six people were wounded, three critically, before police who were monitoring him opened fire within 60 seconds of the attack starting.

"What happened today was despicable, it was hateful, it was wrong," she said, adding it was not representative of any faith or community.

Asked about the man's motivations, she said: "it was a violent ideology and ISIS-inspired", using another name for the Islamic State group.

Ardern said she was limited in what she could say publicly about the man, who had been under surveillance since 2016, because he was the subject of court suppression orders.

Police Commissioner Andrew Coster said authorities were confident the man was acting alone and there was no further danger to the community.

New Zealand's worst terror attack was the Christchurch mosques shootings in March 2019, when a white supremacist gunman murdered 51 Muslim worshippers and severely wounded another 40.