We're being tested by Sydney siege: Baird

Premier Mike Baird says NSW's resolve is being tested by the Martin Place siege.

NSW Premier Mike Baird has said Sydney will meet the challenge of the Martin Place siege head on. (AAP)

NSW Premier Mike Baird says Sydney is being tested by the Martin Place siege and will meet the challenge head on.

Up to 50 people have been held hostage at the Lindt chocolate cafe since just before 10am on Monday, with Sydney's business district now locked down.

"We are being tested in Sydney today but we will face it head on," Mr Baird said.

"We will remain a strong and democratic civil society. We will get through this."

Mr Baird fronted the media on Monday afternoon with NSW Police Commissioner Andrew Scipione, who confirmed a gunman was holding an undisclosed number of hostages at the cafe.

"I have full confidence in the police commissioner and the incredible worked of the NSW police force," Mr Baird said.

"They are the world's best. They today have acted decisively.

"They are on top of the situation.

"They are doing everything possible that needs to be done."