Prime Minister Tony Abbott has praised Sydney residents for their calmness in responding to the unfolding siege in the city's CBD.
Mr Abbott said he had just chaired a meeting of the National Security Committee of cabinet briefed by NSW Premier Mike Baird and NSW police commissioner Andrew Scipione.
"This is a very disturbing incident. It is profoundly shocking that innocent people should be held hostage by an armed person claiming political motivation," he said in a recorded update.
Mr Abbott said NSW police and other security agencies had responded with great professionalism.
He said throughout the day there had been nothing but total cooperation between governments, police and other agencies.
"I think I can also commend the people of Sydney for the calmness with which they have reacted to this disturbing incident. We are a free, open and generous people and today we have responded to this in character," he said.
Mr Abbott said he had received messages of support from a number of international leaders.
"Yes, it has been a difficult day. Yes, it is a day which has tested us but so far, like Australians in all sorts of situation, we have risen to the challenge," he said.
The prime minister urged people to report any suspicious activity to the national security hotline - 1800 123 400.
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