An employee of software giant Infosys was among the people held hostage by an unidentified gunman and an Islamic flag was displayed at a Sydney cafe in the heart of the city's financial district, the company said on Monday.
"We can confirm that one Infosys employee is among the hostages at the Lindt Cafe in Sydney," the company said in a statement.
"The family of the employee has been informed and we are extending all possible support to them in this difficult time," it said.
"We hope that this situation gets resolved peacefully and at the earliest," said the company.Infosys' confirmation came shortly after the government said an Indian could be among the captives.
"There is some info that one of our Indian IT professionals is among those held hostage in the cafe. The external affairs minister is in touch with authorities concerned and trying to get information," union minister Venkaiah Naidu said.
Five people have fled the cafe since the siege started early Monday, triggering a lockdown of the area.
A square in the city was evacuated as hundreds of armed police surrounded the Lindt chocolate cafe, where a flag -- black with white Arabic writing -- was held to a window by customers.
More than 40 Australian Muslim groups jointly condemned the siege at the cafe.
"We reject any attempt to take the innocent life of any human being or to instill fear and terror into their hearts," they said in a statement, adding that it was a "despicable act".
Australian TV reports said the gunman has demanded that a flag of the Islamic State group be delivered to him and warned that four bombs have been planted around the city.
Channel Ten said it had spoken to two of the hostages inside the cafe and the man holding them had made a series of demands.
"Our #TenNews team have spoken directly to 2 hostages inside the café... They are confirming 2 demands from the perpetrator," the network tweeted.
"He needs the ISIL flag to be directly delivered to the cafe; And his 2nd request is to speak to the Prime Minster.
"They also state there are 4 bombs... two inside the Lindt café at Martin Place - and two further in the Sydney CBD."
There was no confirmation from police.
"We do not want any speculation. We are in touch with the gunman. Our aim is to resolve it peacefully," News South Wales deputy police commissioner Catherine Burn said.
The report came shortly after live television footage showed five people fleeing the building, with armed police on standby.A hostage runs towards a police officer outside Lindt cafe, where other hostages are being held, in Martin Place in central Sydney. REUTERS.
Hostages holed up
The first three people ran out of the Lindt Chocolat Cafe in downtown Sydney six hours into the hostage crisis, and two women sprinted from a fire exit into the arms of waiting police shortly afterward. Both women were wearing aprons with the Lindt chocolate logo, indicating they were cafe employees.
It was not clear exactly how many people remained inside the cafe at Martin Place, a plaza in the heart of the city's financial and shopping district that is packed with holiday shoppers this time of year.
Many of those inside the cafe would have been taken hostage as they stopped in for their morning coffees.
New South Wales state police Commissioner Andrew Scipione said police did not know the gunman's motivation.
"We have not yet confirmed it is a terrorism-related event," Scipione said.
"We're dealing with a hostage situation with an armed offender and dealing with it accordingly. We are ready to escalate should we need to," he said.
"We want the matter resolved peacefully and we will do all we need to do to ensure that," he added.
He asked any media that might be contacted by the gunman to urge him to talk directly to police.
As the drama dragged into its 10th hour, police deputy commissioner Catherine Burn said negotiators were talking with the gunman. Officials had no information to suggest anyone had been harmed.
Television video shot through the cafe's windows showed several people with their arms in the air and hands pressed against the glass, and two people holding up a black flag with the Shahada, or Islamic declaration of faith, written on it.
Shahada has often been used by extremists, raising fears that a terrorist incident was playing out in the heart of Australia's biggest city.
The Shahada translates as "There is no god but God and Muhammad is his messenger." It is considered the first of Islam's five pillars of faith, and is similar to the Lord's Prayer in Christianity. It is pervasive throughout Islamic culture, including the green flag of Saudi Arabia. Jihadis have used the Shahada in their own black flag.
Seven Network television news staff watched the gunman and hostages for hours from a fourth floor window of their Sydney offices, opposite the cafe.
The gunman could be seen pacing back and forth past the cafe's four windows. Reporter Chris Reason said the man carried what appeared to be a pump-action shotgun, was unshaven and wore a white shirt and a black cap.
Network staff counted about 15 different faces among hostages forced up against the windows.
"The gunman seems to be sort of rotating these people through these positions on the windows with their hands and faces up against the glass," Reason said in a report from the vantage point.
"One woman we've counted was there for at least two hours - an extraordinary, agonizing time for her surely having to stand on her feet for that long."
"Just two hours ago when we saw that rush of escapees, we could see from up here in this vantage point the gunman got extremely agitated as he realized those five had got out. He started screaming orders at the people, the hostages who remain behind," he added.
St Vincent's hospital spokesperson David Faktor said a male hostage was in satisfactory condition in the hospital's emergency department. He was the only one of the freed hostages to be taken to a hospital, and Scipione said he was being treated for a pre-existing condition.
Hundreds of police flooded into the area, streets were closed and offices evacuated. The public was told to stay away from Martin Place, site of the state premier's office, the Reserve Bank of Australia, and the headquarters of two of the nation's largest banks. The state parliament house is a few blocks away.
Journalist Chris Kenny, who was in the Lindt cafe just before the siege began, said he understood the automatic glass sliding doors had been disabled.
This screengrab taken from Australian Channel Seven shows the suspected gunman inside a cafe in the central business district of Sydney. (AFP Photo)
"One woman said she tried to go into the shop just after I came out with my takeaway coffee but the doors wouldn't open," he told the newspaper he works for, The Australian.
"So obviously whoever is doing this has disabled the automatic glass sliding doors to stop anyone else going in and she said immediately she could see there was a weapon.
"She mentioned it being taken out of a blue bag and people were straight away asked to put up their hands."
Suspicious package, arrest
Adding to the unfolding drama, the nearby Sydney Opera House was also cleared by police, apparently over a suspicious package. It was not clear if the two incidents were related.
Scipione said the siege was contained to a single event in Sydney's central business district and that the city remained open for business.
Police also announced a man had been arrested in Sydney on alleged terrorism offences.
They said the 25-year-old was seized as part of "continuing investigations into the planning of a terrorist attack on Australian soil and the facilitation of travel of Australian citizens to Syria to engage in armed combat".
It was not clear if the matters were related.
The arrest comes after the government in September raised its terror threat level and police conducted large-scale counter-terror raids across the country.
Only two people were charged despite 800 officers being involved in the operation.
More than 70 Australians are estimated to be fighting for Islamic militants in Iraq and Syria. At least 20 have died and there are mounting concerns that increasing numbers of youths are being radicalised and could mount attacks at home.
Australia has been on high alert after the government raised concerns that citizens who have fought alongside jihadists in Iraq and Syria could return home radicalised and capable of carrying out attacks.
Prime Minister Tony Abbott convened a national security meeting to deal with the "disturbing" developments, suggesting only one person was responsible for the Lindt cafe incident.
"We don't yet know the motivation of the perpetrator, we don't know whether this is politically motivated although obviously there are some indications that it could be," he said.
"Australia is a peaceful, open, and generous society. Nothing should ever change that and that's why I would urge all Australians today to go about their business as usual," he added.
Lindt Australia posted a message on its Facebook page thanking the public for its support.
"We are deeply concerned over this serious incident and our thoughts and prayers are with the staff and customers involved and all their friends and families," the company wrote.
US President Barack Obama has been briefed about the crisis in Sydney, a White House official said.
(With AFP and AP inputs)