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A police operation is underway at a café in central Sydney, where up to 40 hostages are being held by unknown attackers and a black Daesh-jihadist flag can be seen.

It comes amid Australia’s backing of the US-led operation against Daesh (so called Islamic State).

A senior Lindt Australia official said that 10 staff and up to 30 customers could be held inside the Lindt Chocolate Café in Martin Place. There were “probably 30 customers” at the time of the attack, Sky Business quoted Lindt Australia Chief Executive Steve Loane as saying. There was no immediate confirmation of the exact number of assailants.

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The area surrounding the cafe has been sealed off by armed police, and Australian authorities have cleared airspace over central Sydney to make way for police helicopters.

Media reports said that one of the hostages managed to post a tweet, in which he warned that police should be “cautious.”

“A police operation is underway in Martin Place, Sydney’s CBD. People are advised to avoid the area,”New South Wales (NSW) police tweeted.

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Meanwhile, live TV footage showed people standing inside a café with their hands pressed against the windows. At least one of the attackers was caught on camera wearing a traditional Islamic cap.

The hostages were forced to hold a black flag with an Arabic inscription, prompting fears that ruthless Daesh-Islamic State (IS, formerly ISIS/ISIL) militants were behind the attack.

Reports on the ground suggest that young women being held hostage in the cafe are being used as a shield, while an attacker is seen pacing around the room.

Following news that police were trying to establish contact with the hostage-takers, reports of their demands emerged on local media.

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A captor reportedly demanded to speak with Prime Minister Tony Abbott live on the radio, Australian radio host of 2GB morning show, Ray Hadley, has said. Hadley added that hostages inside the cafe contacted him. He declined airing their conversation for the safety of those inside the building.

Another report claimed that the gunmen have explosive suicide belts.

Dozens of police, including a SWAT team, were dispatched to the scene, and a couple hundred people were held back by cordons amid the evacuation of nearby buildings.

The flag – which appeared different from the one typically used by ISIS – was identified as the shahada, or the statement of Islamic faith. The shahada itself only contains religious inscription “There is no god but the God, Muhammad is the messenger of the God.” It is not directly connected to extremism, however, its variations have been used by jihadi groups over the years.

The gunmen’s attack, which took place in Sydney’s central business district, forced nearby buildings in Martin Place – including the Reserve Bank of Australia – to go on lockdown.

The US has evacuated its Sydney consulate, located close to the Lindt cafe, Reuters quoted a spokeswoman as saying.

The consulate released an emergency statement to US citizens, warning them to “maintain a high level of vigilance and take appropriate steps to enhance your personal security.”

Soon after news of the hostage situation emerged, Sydney’s iconic Opera House was also evacuated. The move was reportedly prompted by a suspicious package found inside the building.

Local authorities put up barricades in front of the Opera House and a police helicopter was dispatched. Riot police are arriving at the steps of the building.

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Around 200 people were instructed to go to the western side of the building, The Australian reported. Witnesses heard security guards saying that a “training event” was taking place.

Australian Prime Minister Tony Abbott called the situation “deeply concerning,” adding that everything is being done to respond to the incident.

“This is obviously a deeply concerning incident but all Australians should be reassured that our law enforcement and security agencies are well trained and equipped and are responding in a thorough and professional manner,” Abbott said in a statement.

“We don’t yet know the motivation of the perpetrator,” Abbott added at an urgent press conference. He did not rule out that the attack could be “politically motivated.”

The prime minister said that the National Security Committee of Cabinet was briefed on the situation and he has spoken to NSW Premier Mike Baird, offering him all possible Commonwealth support and assistance.

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