"His condition has improved and he has been taken off the critical care list," said Rod Jackson Smith, media manager for Royal Melbourne Hospital where 23-year-old Jalvinder Singh, whose identity was revealed on Wednesday, was admitted in a critical condition on Tuesday.

Singh, who was lying injured on the roadside for over two hours, was found at 6 AM local time disoriented and with hypothermia near a hotel in Clifton Hill, several hundred metres from his smashed car and was taken to hospital.

The victim had stab wounds in the upper body and the homicide squad has been notified, police had said on Tuesday.

Singh had just started doing night shifts driving cabs. On Tuesday night, police released video images of the attack and arrested one 45-year-old Parish Charles.

Senior Constable Brendan Smith earlier said the suspect was possibly a passenger who might have driven the taxi a short distance after the attack before it collided with a power pole.

Meanwhile, dozens of cabbies protested the assault on the Indian national by taking off their shirts and blocked a busy intersection here, disrupting vehicular movement.

The agitators, who want the Australian government to take swift action in the matter, also raised several demands, including compensation for the cabbie and severe punishment for the offender.

Expressing sympathy towards victim's family, an Indian taxi operator, Harpreet Singh, said "many Indian students are taxi drivers as they can earn good money and raise their university fee. It is sad to see how these students become the target."