Hostages seen running out of Sydney cafe

An armed assailant is holding an unknown number of hostages inside the Lindt cafe in Sydney's CBD.

Armed police stay at the main entrance of a cafe in the central business district of Sydney on 15 December 2014. Picture: AFP.

SYDNEY - Hostages were shown running out of a Sydney cafe at the centre of a siege on Monday.

The footage showed a small number of people leaving the Lindt cafe, including one wearing a Lindt apron, as armed police moved closer to the door.

An armed assailant was holding an unknown number of hostages inside the cafe, police said, with local television showing some being forced to hold up a black flag with white Arabic writing in the window.

Australian police said negotiators had been in contact with the gunman holding hostages in a Sydney cafe siege but refused to speculate on his possible motivation.

New South Wales Deputy Police Commissioner Catherine Burn declined to say how many were still being held in the cafe but said it "is not as high as 30".

Burn told reporters there was no indication that any of the remaining hostages had been harmed.

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Prime Minister Tony Abbott, who has warned of militant plans to strike Australian targets, said there were indications the hostage situation at the cafe was politically motivated.

"This is a very disturbing incident. I can understand the concerns and anxieties of the Australian people," Abbott told reporters in Canberra, without providing any information on the siege.

Australia, a staunch ally of the United States and its escalating action against the Islamic State in Syria and Iraq, is on high alert for attacks by home-grown militants returning from fighting in the Middle East.

"We have moved to a footing that would be consistent with a terrorist event," Andrew Scipione, police commissioner for the state of New South Wales, told reporters in Sydney.

The cafe was directly opposite a commercial television studio and footage earlier showed several people inside the cafe standing with their hands pressed against the windows.

Pictures showed a black and white flag similar to those used by Islamic State militants in Iraq and Syria being held up by what appeared to be a staff member and another woman. Local media reports said the flag was the Shahada, a general expression of faith in Islam, a translation of which is: "There is no god but Allah; Muhammad is the Messenger of Allah".

The incident forced the evacuation of nearby buildings in Sydney's central business district and sent shockwaves around a country where many people have started to turn their attention to the approaching Christmas festive season following earlier security scares.

In September, Australian anti-terrorism police said they had thwarted an imminent threat to behead a random member of the public and days later, a teenager in Melbourne was shot dead after attacking two anti-terrorism officers with a knife.

[LISTEN]Correspondent Robert Kaldor on the hostage situation

EVACUATING BY LADDER

Dozens of heavily armed police surrounded the cafe in Martin Place after the siege began around 9:45 am. local time. The area is home to the Reserve Bank of Australia, commercial banks and close to the New South Wales state parliament.

"I walked up to the door and then everyone was sitting down and the door's locked which is pretty weird because it's never locked and there was one guy walking around with a hat and a beard," a man who identified himself as Bruno, a worker at the cafe, told the Australian Broadcasting Corp, referring to the suspected assailant. He said he then turned away.

A couple of hundred people were being held back by cordons and a police SWAT team and the fire brigade's hazardous unit were on the scene, a Reuters witness said.

Several hours into the siege, police led about two dozen people out of a building opposite the cafe and through the cordon. Others were evacuated from the building above the cafe by ladder, television pictures showed.

The Reserve Bank of Australia said staff had been locked down inside the building, and were all safe and accounted for.

The nearby US consulate was also evacuated, according to an embassy spokeswoman, along with the Sydney Opera House. Tourists were being let back into the world-famous venue by early afternoon.

[LISTEN] Courtney in Sydney works six minutes away from the hostage situation.