Police said no-one has been injured, but an area has been locked down, and several residents have been evacuated.
The exclusion zone includes the police station, and Surat Development Road, Day Street, Benn Street, Fry Street and Milne Street.Residents told the ABC they heard multiple gun shots.
The town made headlines last month after a deadly shooting at a nearby property in which two police officers and a local man were killed in an incident that also left three assailants dead.
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