The federal officer, known only as Officer B, has told an inquest into the 2014 death of Numan Haider that his fellow policeman saved his life when he fired.
"If (Officer A) had not fired the shot I am sure that Haider would have cut my throat and cut my head off," Officer B said in his statement to the inquest on Thursday.
Both officers said they had no doubt Haider's intention was to kill as he lunged at them with a knife outside the Endeavour Hills police station on September 23, 2014.
Officer A, from Victoria Police, said he considered alternatives to lethal force for a fraction of a second before he drew his firearm.
"If I had not shot Haider he would have killed Officer B and then returned to do the same to me," Officer A said.
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The inquest adjourned briefly as Officer A struggled to describe the incident during which he sustained lacerations to his arm.
His interaction with Haider lasted about 20 seconds, from when they shook hands to when he fired his gun, Officer A told the inquest.
Officer B said there was no time to react.
"I can't even say how he got to me, just that he was suddenly on me."
Officer B sustained two lacerations to his face, two stab wounds to his left shoulder and a stab would to the centre of his chest in the attack.
The officers, who were attached to the Joint Counter Terror Team, had arranged to meet with Haider.
The previous week Haider had waved a Shahada flag at police at the Dandenong Plaza shopping centre to protest counter-terror raids in Sydney and Brisbane that day.
Officer B said the original idea had been to have a casual conversation with Haider.
"There were no specific security concerns with Haider."
Both officers were aware Haider was a person of interest to ASIO and Officer B said as he was being attacked he remembered a fatwa had been issued against Australia.
"I had known of a fatwa from a few days before suggesting that AFP and military should be killed and beheaded," he said.
"All of that went through my mind as I was on the ground."
The inquest continues before Victorian Coroner John Olle.
