Police negotiators and paramedics have converged on a neighbourhood in Bellambi after reports of a siege situation.

Early reports indicate a man has barricaded himself inside a property with a knife.

Emergency services believe another person is also inside the home.

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Police were called to an address on Robert Cram Drive just before 11am Tuesday.

Paramedics remain at the site on standby.

Update 1pm: A man briefly emerged from the townhouse at the centre of the police operation.

He was unarmed and, from the first-floor balcony, spoke to police before returning inside with woman standing close by.

An onlooker told the Mercury the man earlier emerged naked and "waved his bum" at the street.

Another agitated man was earlier cautioned and sent away by police after he arrived at the street on a motorbike, walked under the police tape and attempted to approach the house.

The man was heard saying the house belonged to his mother, who was on holidays.

He angrily confronted a woman who appeared to be using a mobile phone to negotiate with someone inside the home.

Update 1.15pm: The man has now repeatedly emerged from the home onto the balcony, apparently in an agitated state.

Witnesses have told the Mercury that a bleeding wound to the man's face is the result of him earlier punching himself in the head "about 20 times".

The incident has drawn a large number of police and other emergency resources to the street and scores of residents and passers-by are now looking on.

Update 1.30pm: Part of Robert Cram Drive remains closed to traffic. Several cars were trapped in a car park at the beach end of the street before police arranged for them to leave via local parkland.

Update 2.15pm: The Mercury has been unable to confirm reports there is a baby inside the property.

NSW Police have released the following statement: "A police operation is currently underway in Wollongong.

"About 11am, police were conducting inquiries along Robert Cram Drive, Bellambi.

"The street has been cordoned off and the public is asked to avoid the area."

2:45pm: The man has emerged from the homne and surrendered to police.

He was taken into the back of a police car at 2:43pm.

3:05pm: Contrary to rumour, the Mercury has received confirmation there was no baby at the property.

More to come.

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