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BEIJING, Dec. 15 (Xinhua) -- Australia has been put on a nationwide alert on Monday for possible terror threats after an armed man suspected of being related to radical Islamists took up to 40 hostages in central Sydney and forced part of the city into lockdown.

CENTRAL SYDNEY SHUT DOWN

The hostage-taking began at around 9:45 a.m. local time in a cafe at the Martin Place, Sydney's central business and financial district close to the New South Wales state parliament.

A man carrying a firearm and wearing a black cloak has been spotted inside the Lindt Chocolate cafe with an undisclosed number of hostages, some of whom were forced to stand with their hands pressed against the window and hold a black and white Islamic flag bearing Arabic writings.

It is unclear what the flag stands for but it seems similar to those used by Islamic State militants in Iraq and Syria.

Lindt Australia CEO Steve Loane told news.com.au he believes there are about 40 people inside the cafe, including staff and customers. Five hostages have run free from the cafe, but whether they were freed or escaped remains unknown.

According to local radio reports, the gunman has told police negotiators that they have planted "devices" all around Sydney and demanded to talk to Prime Minister Tony Abbott.

While heavily armed NSW police move into positions in surrounding areas, parts of Sydney have been forced into lockdown. Apart from nearby streets, railways, major banks and shops, police have also evacuated the Sydney Opera House and cut down traffic on the Sydney Harbor Bridge. People were asked to avoid the area.

NSW police commissioner Andrew Scipione told reporters that police are doing all they can to resolve the situation peacefully and there are tight controls around the location with "heavy" police presence.

"The officers there are well trained. They know what they are doing."

Scipione said police did not know the gunman's motivation and are working to determine where he was from.

Several hours into the siege, police have evacuated about two dozen people out of a building opposite the cafe by ladder, television pictures showed.