A terrified young mum and her 10-year-old daughter told how they fled a woman armed with a knife before police shot a suspect to the floor.
The parent was on her way to her sister's home in Toxteth when they saw the woman reportedly following a boy on a bike.
But when the youth rode off on North Hill Street, the witness told how the armed woman turned her attention to the mum and child, and was only a few yards away from them.
Eventually, the mum and her child reached her sister's home and they managed to escape inside.
The person shot suffered a wound to her upper body after police were called to Cairns Street and was rushed to hospital where her current condition is unknown.
An aunt, who spoke to her niece at length about what happened, told the ECHO: "My niece was walking up North Hill Street from one of the side streets that comes off it.
"This lad was riding on a bike and this woman was behind them with a knife.
"My grand-niece started to get really panicky, and her mum said just ignore it, let's get past the road.
"The next minute the lad rides off and she is behind them with the knife.
"The little girl was really worried and her mum was saying, 'let's just carry on walking, we'll get in the house and we'll be fine.'
"The next minute, they crossed the road, she's coming up behind us again, still carrying on.
"She just carried on walking and ignored her.
"She told the police they needed to come and when she got back someone said she'd been shot."
The relative described the 10-year-old as traumatised and said "it could have been a lot worse."
And she added: "It wasn't just a small knife it was a big blade.
You've got someone walking behind you with a knife, you are scared for yourself, but more scared for your 10 year old child.
"She was just relieved she'd managed to her her own daughter to safety.
"It's just so scary, they walk up there all the time, that road.
"If it had been a normal day, that road would have been full of children.
"People walk up and down with their children, babies and prams, all day every day."
A police spokeswoman said: "We can confirm officers are currently dealing with an incident in Toxteth.
"Officers were called at 1.50pm today, Thursday 9th July, to Cairns Street to reports of a woman armed with a knife.
"Patrols attended the scene and a female was shot by police and suffered an injury to her upper body. The woman has been taken to hospital for treatment.
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"An investigation is underway and the area is currently cordoned off.
"The incident has been referred to the Independent Office for Police Conduct(IOPC)."
An IOPC spokesperson said: "We have begun an independent investigation after a woman was shot by Merseyside Police in the Toxteth area of Liverpool today.
"The incident was referred to us, as is mandatory in these circumstances, at 2:45pm.
“Our investigation is in its very early stages and we have investigators attending the scene and the post incident procedures to begin gathering evidence. The woman is currently being treated in hospital.
“Our thoughts are with everyone affected by this incident.”