9:58pm:

9:12pm: 

A female hostage appears to turn off the lights at the Lindt Cafe tonight. Police Commissioner Andrew Scipione would not speculate on why. 

7.45pm:

Police have identified who the gunman is. He is known to police.

Chris Reason, a journalist from Channel Seven which occupies a nearby building, said in posts to social media site Twitter that the gunman appeared to be rotating hostages, forcing them to stand against windows for as long as two hours at a time.

From inside Martin Place newsroom, we've counted around 15 hostages - not 50 - mix of women, men, young, old - but no children. — Chris Reason (@ChrisReason7) December 15, 2014

Reason said the gunman could be seen clearly, wearing "a white shirt, black cap, unshaven, holds [possible] pump action shotgun".

6.45pm:

A gunman continues to negotiate with police almost nine hours into a hostage siege in the Lindt Chocolat Cafe in Martin Place in the heart of Sydney's CBD.

Five hostages have managed to flee the cafe, hours after a gunman first holed himself up in the store and forced hostages to display an Islamic flag. It remains unclear how many hostages are still in the cafe.

Police have cordoned off an exclusion zone around the building, closing some roads.

Police have also requested that media outlets do not report the gunman's demands. This article has been updated to remove earlier references to the reported demands.

Earlier, two female cafe workers ran from the building at about 5pm. Three men escaped about an hour earlier. 

Martin Place siege: separating fact from fiction

5.20pm:

The NSW Police have activated Task Force Pioneer, meaning the hostage situation in Sydney's Martin Place is now being treated as a terrorist attack.

Deputy Commissioner Catherine Burn confirmed the taskforce had been activated just before 4pm on Monday. It is not the first time Pioneer has been used.

5pm:

It's been reported that two women have just escaped from the cafe. Television footage has shown two women, both of whom appear to be cafe workers, running down Martin Place away from the cafe. Five hostages have now fled the cafe.

4.33pm:

All performances at the Sydney Opera House tonight have been cancelled in light of the Martin Place siege.

4.21pm: 

4.14pm: 

Crime Editor Nick Ralston has been watching the footage of the escape of three hostages from the Lindt Cafe at Martin Place.

Ralston says the footage shows two men running from towards the front of the cafe on Elizabeth Street and a third, dressed in what appears to be a Lindt uniform, escaping out a side door on Phillip Street.

A heavily armed officer also can bee seen coming out of the side door behind the staff worker.

4.04pm:  Dep Commissioner Burn says she cannot confirm the number of people still inside the building, but it is not as high as 30.

"The information that I have is that nobody has been harmed or injured at the moment," she said.

"We clearly are dealing with a situation that is unfolding and it's happening as we speak and the most important thing is the safety of those hostages and I wouldn't want to do anything that may impact on the safety of those hostages."

4.00pm: Dep Commissioner Burn said she could not confirm the number of people remaining inside the cafe

"Those operational details will be forthcoming but its not a good time to speculate."

"Police negotiators have had contact and they will continue to have contact," she said.

3:59pm: Deputy Commissioner Burn has confirmed that three hostages have made it out of the Lindt Cafe at Martin Place.

In a press conference, she said she did not have any information that any people inside the cafe had been harmed at this stage.

"A peaceful resolution will be what we are working for," she said.

3.54pm: The NSW Police has opened a new phone line to take calls from the public. Police are asking members of the public seeking information to call 1800 227 228, and not 000 or the Police Assistance Line.

3.44pm:  NSW Police have not confirmed that any hostages have been released or escaped.

3.41pm: Three people - one staff member and two others - have been seen on footage shown on Channel 7 running from the Lindt Cafe. 

3.39pm: Channel 7 is reporting hostages are running from the Lindt Cafe in Martin Place.

3.38pm:

3.15pm: More details into the ongoing hostage situation may emerge soon. Deputy Police Commissioner, Specialist Operations, Catherine Burn, will address media at a press conference at 3.30pm.

3.10pm: Lindt Australia has issued a statement:

2.54pm:

Motorists and public transport users should follow the directions of emergency services and transport staff on the ground and allow plenty of additional travel time.

Traffic is heavy and motorists are advised to expect significant delays.

Changes to public transport conditions are also in place as a result of road closures.

Most bus services continue to operate along regular routes however, 

Passengers should be aware that services may not run to timetable.

Passengers are also able to use their tickets across all forms of public transport. Bus marshals are in the city working to assist passengers to get to their destination. 

2.34pm: A stunning photo from photographer Cole Bennetts, showing the deserted surrounds of the Opera House.

2.15pm:

This from Mercury reporter Josh Butler.

Ken Whittingham is currently locked down next to the Channel 7 building in Martin Place, and said his office may be evacuated at any moment.

"They've locked down a lot of the buildings, and they've extended the police tape to just in front of our building," he said.

Mr Whittingham works at PPB Advisory, just off Martin Place. He is a Sutherland local, but has family and work links to the Illawarra. 

He said his building may be the next evacuated.

"We can't leave. They haven't told us much, but they may evacuate us," he said. "It's a bit of a ghost town down there. I'm looking at the scrum of media, and all the police and fire engines."

2.10pm: 

NSW Police Commissioner Andrew Scipione said there are hundred of police in the CBD, and there will be more officers sent out if needed.

He said that police were working hard to find out the number of hostages being held.

Police are still trying to work out the meaning of the flag that has been held up in the cafe windows.

He said the siege does not appear to be linked to terrorism arrests this morning.

He said police were treating the siege as a hostage situation at the moment, but were prepared to escalate their response if needed.

"We have not yet confirmed this is a terrorism-related event," he said.

Mr Baird said: "We are incredibly proud of this city, the values we hold dear ... I am very confident and thankful for the police and their activities. From what I've seen today, we're very lucky to have them.

"This is an event that is obviously testing all of us here in the city ... The important message is we have all the activities in hand, we are dealing with it and it's best that we get back to it."

2.09pm: A map showing the location of the siege at the Lindt cafe in Sydney. It shows just how close it is to important sites, like Parliament House, the NSW Law Courts, the Reserve Bank, and the US Consulate. 

2.00pm: This from Mercury reporter Josh Butler: 

South Coast Labour Council secretary Arthur Rorris has described teams of heavily armed police running "virtually over the top of my bonnet" as he drove near Martin Place on Monday morning.

Mr Rorris had been in Sydney for a series of meetings. Around 10am he was travelling on Macquarie Street near the intersection of Martin Place, when he found himself in the middle of an unprecedented police standoff.

"I had been in meetings and didn't get any messages about what was going on. We were stopped at the lights near Martin Place, and about two dozen heavily armed police in riot gear went virtually over the top of my bonnet," Mr Rorris said.

He called the situation "pretty surreal," describing the "eerie quiet" as normally-bustling Martin Place was instead populated by emergency services crews.

"The strange thing was, traffic was still flowing. They hadn't cordoned everything off yet," Mr Rorris said.

"We just saw a few dozen heavily armed police, all in heavy gear, running into the site."

1.50pm: 

2GB radio host Ray Hadley claims he has talked to one of the hostages in the Lindt cafe, who was speaking on the phone under instruction from a gunman.

Hadley said he did not broadcast the conversation because it wasn't in anyone's best interests. He said he had been told to ring the number back soon. 

He said the gunman was "talking about other operatives being involved". 

"I could hear the person in the background giving instructions to the young man I was talking to. The young man, remarkably, was quite calm, quite calm, and he was quite happy for us to have his phone number and said 'I want you to ring me back in 10 minutes for further instructions from the man holding us hostage'."

1.43pm: 

Leesha McKenny reports: Michael was customer number 183. It is a fact that separates him, by about 15 minutes, from some of the Lindt Cafe customers now being held hostage in Martin Place.

"The guy who served me... no doubt [is] being held hostage, which is tragic," he said.

Michael said it was a relatively quiet morning when he placed his 9.22am order before lingering in the cafe for a few minutes after running into a client.

"It wasn't what I would consider to be busy," he says, noting there were about 15 to 20 people, including a cafe staff of at least four at the time of his visit.

By contrast, he says the number of hostages could have been far higher if the situation had unfolded 24 hours earlier.

A barrister from the building's 8th Floor Garfield Barwick Chambers, Michael says the cafe was packed with people for the weekend pre-Christmas rush when he stopped into work on Sunday.

"There was a queue out the door," he says.

"If they had gone in even at 8.30 [this morning], it would have been a lot busier because a lot of people get their stuff before they go to 9 o'clock work.

1.33pm: More detail on what's happening in Sydney public schools: A NSW Department of Education spokesman said all public schools within a 1km radius of the CBD were in "lock-out" mode, which prevents anyone from entering the school or children leaving. Any other schools outside this exclusion zone could make the decision to implement lock-outs if they felt it necessary, he said.

1.32pm: From reporter James Robertson: Police presence around state parliament and minister's offices was increased about two months ago following intelligence of an increasingly likely terror threat, according to a parliament source. The number of constables on duty at parliament at any time was nearly doubled to 20 and no-stopping zones were introduced around parliament's perimeter. The state government ministers only months ago moved into 52 martin place, diagonally opposite the siege scene.

1.30pm: 

This from Deputy Technology Editor Ben Grubb: Despite Channel Seven reports that mobile phone services have been shut down in the CBD at the request of police this is not the case.

"There is no disruption to Optus' mobile network in the Sydney CBD. Customers' voice and data services are operational," an Optus spokeswoman said. Telstra and Vodafone spokespeople would not comment, although it's understood they have not shut down services either. The issues may be related to congestion from people posting photos to social media using the mobile networks and making calls at the same time. NSW Police is yet to comment on whether it is using any mobile phone jamming equipment, although use of such equipment is illegal unless approved by the communications regulator, the Australian Communications and Media Authority.

1.18pm: Kiama MP Gareth Ward said he had a staffer working in his Sydney office on Monday, who he believes has been evacuated as part of safety measures at the NSW parliamentary executive offices.

Mr Ward, who is in his Kiama electorate, said he is trying to get in contact with the female staffer, but has not yet been able to reach her. 

Other Illawarra MPs Anna Watson and Shelley Hancock are also working in their electorates.

A staffer at Noreen Hay's office said she did not believe there were any staff in the Wollongong MP's Sydney office.

The Mercury has so far been unable to reach Keira MP Ryan Park or his office.

1.16pm: Channel Seven earlier broadcast this image of a man inside the Lindt cafe.

1.06pm

The Department of Education and Communities Safety and Security Unit has notified public schools of the hostage situation. All schools have been asked to assume 'white level' lockout which means no school group is to leave the school grounds.

1.05pm: 

From Mercury reporter Cydonee Mardon: Wollongong solicitor Graham Lancaster is thanking his lucky stars he stopped to look at books before entering the Sydney Lindt shop on Monday morning.

‘‘I was going to buy some secret Santa gifts after court but I decided to have a look in the book shop on my way. That’s when I heard a whole lot of yelling going on,’’ Mr Lancaster told the Mercury.

1.01pm: Mr Abbott: "We have to appreciate that even in a society such as ours there are people who would wish to do us harm."

"That's why we have police and security organisations of the utmost professionalism that are ready and able to respond to a whole range of situations and contingencies."

1.00pm:

12:58pm: Mr Abbott: "The whole point of politically motivated violence is to scare people out of being themselves."

Mr Abbott says "there are some indications" the incident might be politically motivated."

12:57pm: Mr Abbott says the National Security Committee has been briefed.

Mr Abbott has spoken regularly to NSW Premier Mike Baird and also to the Australian Federal Police.

"I urge everyone to exercise caution in their reporting," Mr Abbott says.

"I will leave all of the operational details to the NSW Police."

12:55pm: Mr Abbott says the business of government must go on.

The Mid Year Economic and Fiscal Outlook will be released shortly.

12:55pm: Mr Abbott: "Australia ia a peaceful, open and generous society. Nothing should ever change that."

Mr Abbott urges people to "go about their business as usual."

Mr Abbott says if anyone sees anything suspicious they should report it to the national security hotline - 1800 123 400.

12:53pm: Prime Minister Tont Abbott is speaking at Parliament House in Canberra.

"We don't yet know the motivation of the perpetrator. We don't know whether this is politically motivated."

"There are some indications it may be."

12.45pm: 

From Mercury reporter Josh Butler: Illawarra resident Dean Martelozzo said his office, which is 300metres away from the Lindt cafe, has been in lockdown for most of the day.

"Everyone is still working, and everyone is concerned. We're all conscious of what is happening, but we're just getting work done,'' he said.

Mr Martelozzo, who is working in a graduate program with the Perpetual investment services group on Pitt Street, said senior management had told staff to stay indoors.

"There was an announcement in the building, that the Sydney alert system had advised everyone to stay in the building," he said.

"Everyone is still working, and everyone is concerned. We're all conscious of what is happening, but we're just getting work done."

Mr Martelozzo said staff were monitoring news websites for updates, but could not see the scene from their office

12.40pm: The Illawarra line is not stopping at Martin Place due to the police operations. Sydney Trains is advising passengers "to stay away from the Sydney CBD."

The line has resumed service between Central and Bondi Junction, but is skipping Martin Place.

12.30pm: 

This is from the Transport Management Centre: 

12.23pm:

12.10pm: Around 30 year 7,8 and 9 students from St John the Evangelist High School are safe and now far from the scene of a siege unfolding at a cafe in Martin Place.

11.11pm: 

This is part of a statement, sent from NSW Police earlier.

"There is a police operation underway at Martin Place. Police and emergency services have responded and a number of streets around the area have been closed. The Martin Place train station is also shut.

Police are dealing with an armed incident and specialist officers are attempting to make contact those inside a café.

Some nearby offices have been evacuated as a precaution. Anyone else in the area encompassing Hunter, George, Elizabeth and Macquarie streets bordering Martin Place is directed to remain indoors and away from open windows. Anyone in the vicinity but outside that area is free to leave their buildings."

Police urge members of the public to remain calm and note that an appropriate police presence is in place."

12.03pm:

12.01pm: The following sites are among those which have been evacuated:

Chifley Square is also reportedly in lock down. Workers in the MLC building offices are unable to leave.

Some workers are being evacuated to Hyde Park.

Noon: Motorists and public transport passengers are being told to stay away from Sydney's central business district as police respond to a siege in the Lindt chocolate shop at Martin Place.

Martin Place and its train station have been shut down after customers and staff were taken hostage. Trains have resumed but are skipping Martin Place station. 

Bus passengers can expect extensive delays as buses divert away from road closures.

Road closures appear to be between Castlereagh and Macquarie streets.

11.53am: NSW Incident Alerts reports the Sydney Harbour Bridge is closed in both directions as a precaution.

11.44am: From  court reporter, Paul Bibby: The NSW Supreme Court's criminal courts on King Street in the CBD have been evacuated, as has have scores of staff from the NSW Crown Solicitor's office.

A number of prominent barristers chambers have also been evacuated, including the Seventh Floor Garfield Barwick Chambers in Martin Place and the Wentworth Chambers.  

Other legal chambers such as Sir Owen Dixon have been locked down, along with dozens of government and commercial buildings in the blocks surrounding the siege, including the Reserve Bank and the NSW Department of Transport.

Some staff say they have been moved out of their offices to the "safe" side of their buildings away from the café.

11.42am: 

11.40am: Qantas have announced flights are diverting around Sydney's CBD

11.35am: Sydney's Muslim leaders have expressed their concerns and a number of organisations have offered to help in "any way they can."

11.34am: 

The Prime Minister's office sent this out moments ago: "New South Wales Police and the Australian Federal Police are currently responding to a reported hostage-taking incident in Martin Place in Sydney.

I have spoken with NSW Premier Mike Baird and offered him all possible Commonwealth support and assistance.

The National Security Committee of Cabinet has also convened for briefings on the 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.

We will provide regular updates as further information becomes available."

11.25am: 

11.25am: Translation of the flag in the Lindt cafe window reads: "There is no god but Allah; Muhammad is the Messenger of Allah."

11.19am:  Fairfax Media understands the Federal Government has convened a meeting of the National Security Committee on Monday morning. It has been warning for months that a terror attack in Australia could happen.

Prime Minister Tony Abbott said after the September terror raids, that all that is required for a domestic Islamic State ordered terror attack is a "knife, iPhone and a victim". 

11.17am: 

11.16am: A woman working in a building near the Lindt cafe said everyone was panicking.

They have received a notice advising: "Due to the current situation in Martin Place security had advised all tenants to remain inside or close to the building until further advised."

11.15am: 

Police "came out running like a madman": witness

This is from James Robertson, our reporter in the CBD: "It was about 10 past 10 they [police] came out running like a madman and said close the shop! Get out!" said Akan Beyzade who owns a kiosk in Martin Place not far from the siege.

11.15am: 

11.13am: 

11.11am: The latest image from photographer, Daniel Munoz

11.09am:

11.06am: Consulate General of the USA issues emergency message

This is the message sent not long ago: "US Consulate Sydney informs US citizens of a security incident involving at least one armed person at Lindt Chocolate Café in Martin Place in Sydney.  New South Wales and Australian Federal police are addressing the threat.  Please avoid the area around Martin Place until further notice. 

"US citizens are strongly encouraged to review your personal security plan, remain aware of your surroundings including local events, and monitor local news stations for updates.  Maintain a high level of vigilance and take appropriate steps to enhance your personal security."  

10:59am: This is the latest from James Robertson, our reporter in the CBD: "A man who gave his name only as Bruno said he'd worked in the cafe for 6 months. 'I was supposed to start at 10 am,' he said while visibly shaken. That was about 15 minutes after the seige started and he was unable to get inside.

10:58am: Channel Seven's Sean Berry has told ABC Radio's 702 that police have asked them not to film, so their live coverage is no longer rolling.

10.56am: There are reports of an incident at the Sydney Opera House. A NSW police spokeswoman says the nature of the incident is not known, other than the fact that officers are there. 

10.55am: An explanation of the flag seen in the cafe windows

From national security correspondent David Wroe: "The flag being shown in the window is not an Islamic State flag, nor one for the other best-known jihadist group Jabhat al-Nusra. Rather, it appears to be a Shahada flag, which represents a general expression of faith in Islam, though has been co-opted by various jihadist groups.

Greg Barton, a terrorism expert from Monash University, says that "getting hold of an (Islamic State) flag would be quite difficult, and people will make do with what they have got".

That means it doesn't help confirm or rule out that the hostage-takers' affiliation is with Islamic State or any other group."

10.47am: This is from Transport NSW:

Trains have resumed operating on the T4 Eastern Suburbs & Illawarra Line, however services are not stopping at Martin Place due to a police operation.

However, motorists and public transport commuters are still advised to stay away from the Sydney CBD.

10.46am: 

10.27am: Here is the latest from James Robertson, our reporter on the scene.

About five uniformed and one plainsclothes police officers are on scene. A fire engine arrived at 10.15 am, a firefighter headed to the scene in full safety gear.

The police have just established an exclusion zone around Martin Place."

Earlier: Hostages are being forced to hold an Islamic flag against the window of the Lindt Chocolat Cafe in Martin Place after reports a gunman had stormed the premises.

About 20 staff and customers are being held by the gunman inside the cafe. A number of people could be seen through the windows with their hands held in the air.

Police confirmed an operation was under way at the shop in Martin Place.

A NSW Police spokeswoman said officers were called to the shop about 9.45am on Monday. She urged people to stay away from Martin Place.

The Channel Seven newsroom, which faces Martin Place, is being evacuated.

Other offices in the Chanel Seven building are believed to be in lockdown.

The Mercury understands the LinkedIn office, located in Martin Place, is in lockdown.

A large number of police are in Martin Place, and are telling people to stay away.

Trains between Central and Bondi Junction have been stopped during the operation.

MORE TO COME

Are you from the Illawarra and working at Martin Place? We'd like to speak to you. Call us on 4221 2207