Bangladesh siege over, Bishop confirms

Australian embassy staff are safe, Foreign Minister Julie Bishop has confirmed, after a siege in the diplomatic quarter of Dhaka, Bangladesh, ended in gunfire.

No Australian nationals are believed to be involved in an attack on a Bangladeshi restaurant. (AAP)

A siege in a popular restaurant in the Bangladeshi capital has ended in gunfire, Foreign Minister Julie Bishop has confirmed.

"I believe that in the last few minutes the hostage situation has been resolved, that is the report we are receiving out of Dhaka," she told reporters.

"There are reports that five gunmen have been killed. There are also reports that a number of other people are unaccounted for and they may have been killed."

Ms Bishop confirmed all Australian Embassy staff were safe.

Bangladeshi police say gunmen attacked the restaurant in the diplomatic area of Dhaka late on Friday and took about 20 hostages, including foreigners, before police stormed the building to free between eight to 10 people trapped inside.

"Our commandos have stormed into the restaurant. Intense gunfighting on," Mizanur Rahman Bhuiyan, a deputy director at the Rapid Action Battalion force, said on Saturday.

Ms Bishop condemned the attack and offered condolences to those involved.

"This is another terrible terrorist attack. We condemn it absolutely and we feel for the people of Bangladesh."

Ms Bishop said she understood ISIS had claimed responsibility for the attack but said that had yet to be confirmed.