hree people have been seen running from a cafe at the centre of a siege involving an unknown number of hostages in the heart of Sydney’s CBD.

An “armed offender” entered the Lindt cafe in Martin Place about 9:00am (AEDT) and has held staff and customers hostage for more than seven hours.

Just before 4:00pm, two people were seen running out a front door, one with his arms in the air.

A man wearing a Lindt apron also ran from a side door that was surrounded by heavily armed police.

“The first thing that we will do is make sure that they are OK and then we will work with these people to find out some more information,” New South Wales Deputy Police Commissioner Catherine Burn said.

Deputy Commissioner Burn said she could not confirm how many people were being held hostage, but police believed it was fewer than 30.

She said people still inside buildings in Martin Place should stay indoors.

“Police will advise you as we go along,” she said.

Hostages were seen pressing a black flag displaying Arabic text against the cafe window soon after police were called to the busy pedestrian thoroughfare.

The text on the flag said: “There is no God but Allah and Muhammad is the messenger of God.”

Commissioner Burn said the motive behind the siege was not clear.

“At this stage, those motivations are not known and it would not be good to speculate,” she said.

Emergency crews have used ladders to evacuate people, including a baby, from upper levels of the building.

Hundreds of officers, many of them heavily armed and wearing body armour, have taken up positions in the area.

Several blocks around the area have been cleared.

Prime Minister Tony Abbott urged Australians to continue living their lives as normal.

“We don’t yet know the motivation of the perpetrator, we don’t know whether this is politically motivated, although obviously there are indications it could be,” he said.

“The whole point of politically motivated violence is to scare people out of being themselves.

“Australia is a peaceful, open, and generous society.

“Nothing should ever change that and that’s why I would urge all Australians today to go about their business as usual.”

702 ABC Sydney’s John Donegan said police were using ladders propped against awnings to evacuate people through windows from floors above the cafe.

“They have got a series of small ladders up onto awnings and into windows,” he said.

“I’ve seen three or four people coming out. It’s a very slow operation.”

A baby was among those carried to safety down a ladder.

Patrick Byrne, a producer at Channel Seven’s headquarters opposite the cafe, said staff at the network watched the situation unfold.

“We raced to the window and saw the shocking and chilling sight of people putting their hands up against the panes of glass at the cafe,” he said.

“This was just extraordinary.

“Then, as we were looking wondering what was going on, it seemed to be like an armed hold-up, more police arrived at Martin Place.

“The area was cleared. People were kept back.

“It was then that gasps went through the newsroom as an ISIS flag was put up against one of the window panes.”

A man at the scene told ABC News he saw a woman try to enter the cafe before she reported seeing a man inside with a gun.

“There was a bit of a kerfuffle and the next thing she said, there was a blue bag, and she said ‘there’s a gun in the bag’, and then the commotion started.

“She told everyone to get going and we’re running out of the building.”

Martin Place worker Josh Acton said he was outside smoking when police suddenly ordered him inside a building, where about 80 people were taking cover.

“We’re on tenterhooks,” he said.

“We have grouped around people’s computers to watch the news come in to see if there’s any further updates.

“They’re all getting messages from loved ones to be safe, so it’s creating a really scary atmosphere.”

The White House has confirmed that US president Barack Obama has been briefed about the siege by his homeland security and counterterrorism chief.

The US Consulate in Sydney has been evacuated and many shops, banks, cinemas, courts and businesses have closed.

Staff and tourists were evacuated from the Sydney Opera House, at Circular Quay about a kilometre away, as a precaution.

Premier Mike Baird said the police and public were being “tested”, but people should go about their business as normal.

Police have urged members of the public to remain calm and avoid the area, and some transport services have been cancelled.

Traffic authorities advised city workers to leave Sydney’s CBD before peak hour if possible.

Qantas is diverting all flights around Sydney CBD, but all flights are operating as scheduled.

Earlier, the Prime Minister issued a statement offering “all possible Commonwealth support and assistance” to the New South Wales Government.

“The National Security Committee of Cabinet has also convened for briefings on the situation,” Mr Abbott said.

“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.”

Federal Transport Minister Warren Truss said the airspace over Sydney CBD had not been shut down, following speculation on social media that it had been closed.

Sydney Airport said flights were operating normally.

Workers from nearby buildings at Martin Place, which were placed in lockdown, were told to evacuate to Hyde Park.

CBD cafe owner Chris Dion said people coming into his business were “terrified”.

“We’ve got the TV on here. Everybody is coming in to have a look and see what’s going on in Martin Place,” he said.

“I’m in disbelief to be honest.

“We live in a beautiful country and this is happening right here in Sydney?”

Elleanor Gillard, who works in another part of the building, said police had told them to stay inside and away from the doors.

“We’ve just been notifying everyone on the floors above – I’m on the ground – not to come down in the lift because the lifts open up right in the foyer between us and Lindt [Chocolat Cafe],” she said.

She said she saw a look of terror on the faces of two hostages who appeared to have been forced up against the glass.

“I’m just thinking about the guys in Lindt – the people we see everyday, go in and buy our coffee from them – and I’m sure they’re terrified. It must be horrible for them.”

In a statement posted on Facebook, Lindt Chocolate Cafe Australia expressed its concern and thanked the public for its support.

“Our thoughts and prayers are with the staff and customers involved and all their friends and families,” the statement said.

The Grand Mufti of Australia, Professor Ibrahim Abu Mohamed, released a statement saying the Muslim community was “devastated” by the incident.

“The Grand Mufti and the Australian National Imam Council condemn this criminal act unequivocally and reiterate that such actions are denounced in part and in whole in Islam.”

The president of the Lebanese Muslim Association, Samier Dandan, said Australian Muslim leaders were in talks to see if the community could help.

He said it was not known who was behind the siege and whether there were any links to the Australian Muslim community.

“Whether he is someone who belongs to the Australian Muslim community or not, we are still waiting for information to be provided by police, and based on that if there’s something the Muslim community can do or assist, we are there.”

The director of the Global Terrorism Research Centre, Professor Greg Barton, said the black flag was clearly meant to signify a link with a terror group, possibly the Islamic State.

“It’s likely a link with its groups, and what’s happening in Syria, rather than a statement of faith,” he told 702 ABC Sydney.

“But it could also be a single lone wolf attacker.”