A gunman who spent the day holed up in a Victorian pub has been arrested and taken to hospital after a stand-off with heavily-armed police.

The man entered the Bellbird Hotel on the Princes Highway between Cann River and Orbost in East Gippsland on Monday morning.

A woman who went into the hotel was confronted by him while he was holding the firearm but he didn't make any direct threats or demands.

She left and called police about 9.30am, sparking a stand-off with the Critical Incident Response Team and the closure of a major highway.

The man was arrested shortly after 7pm and taken to hospital for assessment, police say.

No one was injured during the stand-off but hundreds of motorists spent the day stranded at road blocks in Cann River and Orbost with no traffic diversions possible.

All road blocks were lifted on Monday evening with police thanking the public for their patience.