Self-described cleric, Man Haron Monis, 50, first came to attention of police when he penned poisonous letters to the family of dead Australian soldiers.

Last year he was charged with being an accessory to the murder of his ex-wife and mother of two.

And most recently with more than 50 charges of indecent and sexual assault relating to time allegedly spent as a self-proclaimed "spiritual healer" who dealt with black magic at a premises in western Sydney more than a decade ago.

Monis, who has also gone by the names of Sheikh Haron and Mohammad Hassan Manteghi, was born in Iran and most recently has been living at Bexley North in Sydney's south.

Read more here.

Sydney's CBD is in lockdown as police negotiate with a gunman who stormed into the busy Lindt Chocolat Cafe in Martin Place on Monday morning and took customers and staff hostage. 

In extraordinary and terrifying scenes, hostages could be seen through the cafe's windows with their hands held in the air, while heavily armed police surrounded the building.

A number of hostages were being forced to hold a flag against the window shortly after the siege began at 9.45am.

Thousands of workers across the city have been sent home early and some of the city's major buildings evacuated.

They include the Opera House, the State Library, Channel Seven, the NSW parliamentary executive offices, the NSW Supreme Court's criminal courts, the Downing Centre, and several city legal chambers.

NSW Police Deputy Commissioner Catherine Burn provided an update to media on the hostage crisis at 6.30pm.

"We know there are people being held and we are aware that there is a person who is armed also in the premises."

Deputy Commissioner Burn said five people had emerged from the location and were being assessed to ensure their health was okay.

She said that the situation was now unfolding as a "negotiation" with the armed person.

"Priority is the safety of the people inside that location," she said.

Deputy Commissioner Burn said the approach was the deal with the situation "peacefully."

"It might take a bit of time but that is our approach."

"We will be working into the night if this situation continues and we will be looking at arrangements for tomorrow."

"We are prevented from providing a great deal of information. Please be assured though that all police resources are in place.

"We have the best negotiators in the world."

"There is speculation about what he might want but we have to deal with him at the level of police negotiation," Burn said.

"We are monitoring all forms of communication, whether it is Facebook or Twitter, for any bit of information that might assist."

"If anyone has information about the situation, no matter how small, they should offer it to police," she said. 

WATCH: See footage of three men who escaped from the Lindt Chocolat Cafe. 

At 5pm, television footage showed two women, both of whom appeared to be cafe workers, running down Martin Place away from the cafe.

At 8.15pm, NSW Premier Mike Baird and Police Commissioner Andrew Scipione held a press conference to update the public. 

Premier Baird said his call goes out to the state to pray for those involved. 

"I have complete confidence in the New South Wales Police who have been handling the situation at Martin Place with the professionalism we expect of them," he said. 

Police Commissioner Scipione said police are doing all they can to ensure the safety of those involved. 

"Our only goal tonight, and as long as this takes, is to get the people caught in that building out safely," Commissioner Scipone said. 

"For those that have loved ones caught up in this or those who may be trapped in the building is that we are doing all we can to get them out safely."

WATCH: Premier Mike Baird and Police Commissioner Andrew Scipione address the media on Monday night. 

Premier Baird asked people in Sydney tomorrow to go about their days as usual, though an exclusion zone will be in place around Martin Place.

Those who work in the exclusion zone were asked to work from home. 

A Sydney resident has told Fairfax Media how she spent the morning in lockdown in the CBD while police responded to a terrorist attack at the nearby Lindt Chocolat Café on Monday morning.

The woman, who was working in the NSW Department of Premier and Cabinet office, which is in the same building as Sydney’s Channel 7 studio, became aware of the situation around 10am.

“I had just gone to get a coffee and on the way back in we saw police in the lift and the siren was activated,” she said.

“We were told to remain on our floor with no access to the lifts or the fire escapes and to stay away from the windows.”

The witness said the people in the office were anxious with a lot of mothers calling their children who are on school holidays.

“It was quite scary as there was not much information from officials,” she said.

“We were kept in the dark and turned to the media for our information.

Read the rest of her story here.

The Prime Minister, Tony Abbott, has spoken again about the hostage drama at Martin Place.

Mr Abbott says the national security committee of Cabinet was briefed by NSW Premier Mike Baird and Police Commissioner Andrew Scipione, reports political correspondent James Massola.

Mr Abbott said the incident was "very disturbing" and that it was "profoundly shocking that innocent people should be held hostage by an armed person claiming political motivation".

The Prime Minister praised the handling of the incident by government and police agencies, adding: "I think I can also commend the people of Sydney for the calmness with which they have reacted to this disturbing incident".

"We are a free, open and generous people and today we have responded to this in character," he said.

"Images have been beamed around our country and around the world. I've received messages of support from a number of international leaders and I thank them for their encouragement on this difficult day."

"Yes, it has been a difficult day. Yes, it is a day which has tested us, but so far like Australians in all sorts of situations, we have risen to the challenge."

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 believed to be the first time Task Force Pioneer has been used.

Ms Burn made the announcement moments after three men managed to escape from the Lindt Chocolat Cafe, six hours after the hostage situation began. It is still unclear how many people are inside the cafe.

Task Force Pioneer, used only when responding to a terrorism-related incident, means a co-ordinated police operations centre has been established. Regular briefings will also be held to keep the public aware of what is happening.

"We still don't know what the motivation might be," Ms Burn said. "But in terms of our protocols we've set up our command and control protocols."

Deputy Commissioner Burn said an exclusion zone is in place taking in Hunter, Pitt, King and Elizabeth streets.

"A peaceful resolution is what we are working towards," Ms Burn said. "It is okay to leave the city, it is okay to go home as you usually would."

Ms Burn said police negotiators had made contact with the gunman but his motive was still not clear and warned that it was unhelpful to speculate what might have sparked Monday's attack.

In a nationally televised address, Prime Minister Tony Abbott said he could think of "almost nothing more distressing, more terrifying than to be caught up in such a situation".

"Our hearts go out to these people," he said.

"We have to appreciate that even in a society such as ours, there are people who would wish to do us harm."

"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."

He said he National Security Committee of Cabinet has convened for briefings on the situation.

NSW Premier Mike Baird said he was being updated by NSW Police Commissioner Andrew Scipione.

"All my thoughts and prayers are with those members of the public affected by the situation in Martin Place and the NSW Police who are trained to deal with these events," he said.

"I will provide further information as appropriate."

Heavily armed police have surrounded Martin Place, and negotiators are attempting to speak to the gunman, police said.

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

A woman is believed to have raised the alarm at 9.44am when she saw a man outside the cafe carrying a blue sports bag with a gun inside.

There are reports that there could be two gunman inside the cafe, although police have not confirmed this.

Terrified customers in the cafe could be seen holding an Islamic flag - which is black with white writing on it - up against the glass window.

The flag appears to be a Shahada flag, not an Islamic State flag, but is associated with Islamist and jihadist movements.

Just before 12.30pm, police tackled a man to the ground about 200 metres from the cafe and a police officer was seen with his foot on what appeared to be a small black handgun. 

However police later said the arrest was not related to the ongoing siege.

The cafe is right in the middle of the banking and retail district, and is usually packed with Christmas shoppers at this time of year.

The federal government convened a meeting of the National Security Committee this morning.

It has been warning for months that a terrorist attack in Australia could happen.

The Channel Seven newsroom, which faces Martin Place, has been evacuated, along with the Macquarie Bank and Westpac offices in the area.

The Martin Place studio is Seven's main newsroom and home to breakfast show Sunrise and The Morning Show, which was on air when news of the siege broke about 9.45am.

The network was originally running a live-stream of the siege, but was asked to take it down for security reasons.

It is unknown if any Seven staff are among the hostages. Channel Seven has shifted its network operations to Melbourne during the siege.

State Parliament, which is one block away from the cafe, has also been closed to the public, while David Jones's flagship store in the city was also being evacuated.

Office workers as far away as Circular Quay reported that they were being sent home just before midday.

Police said office workers on Hunter, George, Elizabeth and Macquarie streets bordering Martin Place had been told to stay indoors and away from open windows. Anyone outside that area was free to leave their buildings.

Trains between Central and Bondi Junction were initially stopped, but the Transport Management Centre said services resumed about 10.45am. However Martin Place train station has been closed and trains are not stopping there.

A spokesman for federal Transport Minister Warren Truss said: "The airspace over the Sydney CBD is not in shut down. There are choppers in the air and air traffic is being rerouted according. At this stage no impact on the air traffic network."

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.

A Transport Management Centre spokeswoman said the Sydney Harbour Bridge remained open, despite reports to the contrary.

A NSW Police motorcyclist was involved in an accident with another vehicle just after 11am on the Cahill Expressway, resulting in the closure of some approaches to the bridge.

The motorcyclist was treated by paramedics before the road re-opened a short time later.

- with AAP, James Robertson, Paul Bibby

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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.