A man has been taken into custody after a tense afternoon standoff with police in Bendigo in central Victoria.

A shirtless, bearded man believed to be in his 50s was arrested by police after they were first called to Red Hill Court in Eaglehawk about 1.30pm.

Earlier, police received reports of a man wandering the streets discharging a sawn-off shotgun and threatening residents.

A number of family members attempted to intervene and attempt to control the man, but were held back by officers.

The alleged gunman is understood to have been holed up in a house on Red Hill Court.