The gunman has reportedly demanded a flag of the Islamic State in exchange for releasing some hostages held inside Sydney's Lindt Chocolate Cafe in Martin Place.
A senior figure in the Sydney Muslim community said that the hostage taker had demanded a flag of the Islamic State, for which he had offered to release 'some hostages', the Sydney Morning Herald reported.
Deputy Police Commissioner Catherine Burn said that they had no any information to suggest anyone had been harmed at that stage.
Earlier, five hostages had fled the cafe where a gunman had been holding "fewer than 30" people captive since morning, the report added.
Terming the situation "a very disturbing incident," Prime Minister Tony Abbott urged countrymen to not be swayed by it and "go about their day as normal."
Some hostages inside the cafe were apparently forced to stand at the cafe's windows holding up a flag that bore the Islamic creed.
