A stolen black Porsche Cayenne used in the shooting was later found burnt out in Wollert in the city's north.

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One person injured in the shooting ran around the corner into Chapel Street.

Police are yet to talk to the victims in full detail due to their injuries. They are still confirming whether the person found on Chapel Street was one of the four injured or if there is a fifth person who was shot.

Blood can be seen on the footpath more than 100 metres from the nightclub. Clothes and bullet casings are also scattered on the ground.

Sandra, a 19-year-old who lives nearby, saw the shooting out of her bedroom window while studying.

“I just saw the car roll up and then 'pow, pow, pow, pow' - four times they shot,” she said.

Sandra said the outside of the club was still busy, with many patrons around the entrance.

“The people were all lining up to get in the club, they just start screaming and yelling ‘Oh my god, oh my god’. When the car left they ran to the people on the ground.”

I just saw the car roll up and then 'pow, pow, pow, pow' - four times they shot.

Sandra said she saw two men on the ground, one who had been shot in the leg.

“It was horrific, it was so horrible. I couldn’t sleep, I don’t know if I’m going to be able to do my exams tomorrow.

“I guess this stuff happens but I just saw it all through my window.”

The shooter’s car drove over Malvern Road and was last seen driving up Bray Street.

Homicide Detective Inspector Andy Stamper said it was too early to say whether it was a targeted or random shooting. No arrests have been made.

“This is just a horrendous act,” he said.

He said the full weight of the crime department would be thrown into the investigation.

“No stone will be left unturned,” he said.

Detectives are expected to investigate links to an outlaw motorcycle gang which has made extortion attempts on the nightclub.

A security guard from Love Machine said the music inside the R&B nightclub was so loud that patrons and staff inside had no idea anything was occurring outside during the shooting.

Chapel Street is home to a number of popular nightclubs and the shooting on Sunday occurred while many people were still out.

One woman posted to social media to let her family and friends know she was safe after she witnessed the shooting.

“There was a shooting right in front of us at Love Machine while we were standing across the road ... so please if anyone is out at clubs please go home now,” she said on Facebook.

“We are all in shock but we are all okay and back at the apartment safe.”

Malvern Road remains closed between Chapel Street and Surrey Road as forensic officers collect the clothes and bullet casings left outside the club.

Three officers have searched the drains outside the entrance to the club, pulling up the grate to photograph the area below.

Sarah Guest, who lives a block away from the scene, said she wasn't shocked, given all the drug use she had witnessed in the area.

“I’m not super surprised ... walking to work one day I reckon I saw 10 or 15 syringes in the one gutter," she said.

Edie, who lives in the nearby commission flats, says she didn’t hear anything when the shooting occurred.

‘‘I think they should be stricter on the gun laws,’’ she said. "There is a bit of trouble around here, but it’s usually fighting and stabbings.

‘‘It’s scary because it’s right on your doorstep - it could have happened to one of us.’’

March was the deadliest month for shootings in Victoria in a decade, figures from the Coroners Court of Victoria show.

Five people were killed in Melbourne in four unconnected shootings in less than a fortnight.

Premier Dan Andrews said on Sunday shootings like this one "rock the city".

He said the goevrnment had always supported police when they had sought more powers or resources to control gun crime.

“I’m not aware of any further request for additional gun law reform but given recent events, if the police commissioner came to me and said he needed more, then of course we would stand ready to do that,” he said.

Police are urging people to avoid the area. Anyone with information or footage of the incident can contact Crime Stoppers on 1800 333 000.

With Noel Towell and AAP