15 am.

There were four people inside the house at the time, two have since left uninjured though Thompson said one was transported to hospital to be examined.

'A significant police resource has been deployed to the incident, including the Armed Offenders Squad and the police negotiation team.

' Lockdowns at five Nelson schools were lifted at about 3 pm and Thompson said they went into lockdown as a precaution, along with Nelson Hospital.

'The cordoned area has been reduced to enable entrance to Nelson Hospital for those who need to access the hospital, and to allow 'residents only' access to some streets.

' St John has been placed on standby and an ambulance, rapid response vehicle, and a manager have been sent.

'We know that this will have been an incredibly unsettling event and we want to reassure the community that we are doing all we can to bring the matter to a peaceful conclusion,' Thompson said.

In a statement, Health NZ said Nelson Hospital has been placed in partial lockdown restricted to card access only.

'Visitors and patients are able to access the hospital via the main entrances which are staffed with security personnel to allow that access.

' 'Well I have been able to hear an alarm go off for about 10-15 minutes, and I have come out onto the roadside and up by the hospital between Franklin Street and Motueka Street.

We've got two cop cars blocking the road and down the end of the street heading towards Vanguard.

Up Vanguard Street we've got another police car blocking the road there and we have another undercover cop car with some police holding a gun,' she said.

Nelson City Council said the incident was causing traffic delays on Waimea Road and surrounding areas.

The eBus route 3 was being diverted away from Motueka Street and Franklyn Street, it said, and this would likely cause delays on the route for the rest of the day.