Three people have escaped from a Sydney cafe where it is feared there are dozens of others being held hostage.One employee and two members of the public were seen running from the besieged Lindt chocolate shop and cafe where at least one gunman has reportedly taken up to 40 hostages.
Australian police said negotiators have been in contact with the “armed offender” – but refused to speculate on his possible motivation.
The hostage situation has been unfolding in Martin Place – home to the Reserve Bank of Australia, commercial banks and close to the New South Wales state parliament.
It has been closed off and up to 100 heavily armed police are surrounding the area.
Earlier, live television footage showed patrons inside the cafe standing with their hands pressed against the windows.
A black flag with white Arabic text, similar to those used by Islamic State fighters in Iraq and Syria, was also visible.
According to reports, at least one gunman walked into the cafe just before 10am local time.
Witnesses reported hearing loud bangs which sounded like gunshots and that he was using a young woman “as a shield” inside the cafe.
A Lindt executive said there were about 10 staff and “probably 30 customers” in the cafe before the siege unfolded.
Sydney Opera House has been evacuated after a suspicious package was reportedly found not long after the police operation in the financial district began.
New South Wales police confirmed authorities were dealing with an “incident” there, but it is not known whether they are linking it to events at the cafe.
Prime Minister Tony Abbott said he has convened the National Security Committee for emergency briefings following the “hostage-taking situation”.
“This is obviously a deeply concerning incident but all Australians should be reassured that our law enforcement and security agencies are well trained and equipped and are responding in a thorough and professional manner,” he said.
Mr Abbott said he did not yet know the motivation of those holding the hostages, adding: “Our thoughts and prayers must above all go out to the individuals who are caught up in this.
“I can think of almost nothing more distressing or terrifying than to be caught up in such a situation, and our hearts go out to those people.”
New South Wales state police commissioner Andrew Scipione said police are “dealing with a hostage situation with an armed offender”, but that it was not being treated as a terrorism-related event at this stage.
He said there was “at least one” offender “holding an undisclosed number of hostages”.
Several buildings in the area have been evacuated, including the Channel 7 newsroom opposite the cafe, and staff at the Reserve Bank of Australia are in lockdown inside the building. All are said to be safe.
The United States has evacuated its Sydney consulate and issued an emergency warning to US citizens in the city, urging them to “maintain a high level of vigilance and take appropriate steps to enhance your personal security”.
Trains and bus services have been stopped and roads cordoned off as the public have been told to stay away. Air traffic is functioning as normal.
In a separate development, police said a 25-year-old man had been arrested on alleged terrorism offences in the city just a few hours before the siege operation began.
He was seized this morning as part of “continuing investigations into the planning of a terrorist attack on Australian soil and the facilitation of travel of Australian citizens to Syria to engage in armed combat”.
He was reportedly arrested as he left a prayer hall, with police due to hold a news conference later today with more details.
The arrest comes after the Australian government in September raised its terror threat level and conducted large-scale counter-terror raids across the country.