Workers in Alotau in Papua New Guinea are thought to be hostages of armed men who have been in a confrontation with police in the town centre since this morning.
The Milne Bay Province town is in lockdown with EMTV reporting four tourists may be among the hostages.
The stand-off follows the killing of a police constable in Alotau by an armed gang on Saturday.
NBC reports police have put up barricades near the Alotau Supermarket and there are reports that they have used tear gas to force the hostage takers out of the building.
It says police have managed to assist some of the hostages from the supermarket, but it is thought there are still others being held.
A police mobile squad team has been sent to Alotau to assist.
Cruise ship passengers recalled
All passengers onboard a cruise ship docked in Alotau port have been accounted for.
In a statement P&O cruises says all passengers onboard the Pacific Aria were ordered back to the ship following reports of the armed robbery and eight remaining passengers are returning from an independent local boat tour to a nearby island.
The ship will leave for the Trobriand Islands once all passengers are back on board and is due back in Brisbane on Monday.