Multiple officers trained their firearms on Scott Alexander Brewer Thursday evening, as the very drunk 51-year-old stood outside his Jarrah Way home and urged: "f---ing shoot me... I want to be shot ... come on, come on!".

Brewer had dialled triple zero about 6pm that night, telling the operator "I can't live like this any more" and that he was "going to stab someone". His former wife headed to his home after he also phoned her and said he was "going to get shot by police tonight".

But before she reached him, a neighbour of Brewer's arrived home, leaving his 11-year-old son and toddler daughter in the car as he opened his house and took some bags inside. The children were still in the car when the neighbour heard mumbling coming from the street and, noticing Brewer standing opposite, asked if he was alright.

The neighbour got within two metres of Brewer, again asking if he was alright, when Brewer allegedly replied, "I'm going to f---ing kill you!" and produced a large kitchen knife with a blade about 23cms long.

The nighbour has told police he could hear the sound of the knife cutting through the air as Brewer swung it within 30cms of his neck. He claims Brewer then staggered away onto the street.

Brewer allegedly ignored the man's calls to drop the knife and approached a female neighbour with the weapon still in hand.

The woman was in the driver's seat of her car, with her husband just outside, having just strapped their two-year-old child into a carseat. Brewer allegedly banged on her window and told her, "I'm going to slit your throat". The woman locked the car, opening it momentarily to let her husband in before driving off.

Meantime, multliple police arrived and took "tactical positions" around Brewer, who allegedly ignored all calls to drop the knife, urged the officers to shoot him and warned "I'm going to take one of youse out".

Police allege Brewer was advancing slowly towards officers, having adjusted his grip on the knife so it was pointing downwards, when two officers drew their firearms.

He allegedly got within five metres of officers when two others brought him to the ground with consecutive Taser shocks.

He spent the night in Shellharbour Hospital in the care of mental health workers and was released Friday morning.

He was allegedly too drunk to be interviewed when he was arrested that evening.

Brewer was branted strict conditional bail in Wollongong Local Court on Monday, despite opposing submissions from police prosecutor Sean Thackray.

"It could have been catastrophic," he said.

"Enticing police to shoot him - that could have been extremely serious as well."

Police reported that the neighbours involved were fearful and did not want to return to their homes.

The court heard Brewer was well-known to police, having been detained 18 times in in the past for mental health assessments.

His lawyer, Justine Hall, argued for his release on mental health grounds, suggesting his call to triple zero showed his actions were "a cry for help". She said he had agreed to quit drinking, if released, and that his mother would deposit a large cash surety.

It is a condition of Brewer's release that he not return to his street and that he live with his mother in Warilla. He is subject to drug and alcohol testing up to seven times a week, and police checks twice weekly.

Appearing via audio-visual link, Brewer said: "I'm truly sorry for what I've done".

When the magistrate warned him off approaching any of his alleged victims he responded: "no I won't, not at all."

The matter returns to court August 18.