Police have rescued at least two hostages and arrested a man in central Paris after a four-hour standoff.

The hostage-taker demanded to be put in touch with the Iranian Embassy to deliver a message to the French government, authorities said.

More than a dozen heavily-armed officers, firefighters and rescue workers were stationed outside the building where the hostages were being held.

The area was evacuated and the street, rue des Petites Ecuries, was cordoned off while negotiations were in progress.

France's interior minister later said the hostage-taker had been arrested and the hostages freed.

"The individual has been arrested and the hostages are out of danger," Gerard Collomb said on Twitter.

There were no immediate details on the age, appearance or nationality of the hostage taker.

"His demands were really vague and incoherent," said an interior ministry official. "The negotiator had difficulty understanding."

Police in riot gear surrounded the entrance of a building in central Paris where a man is believed to be holding two people hostage (AP)

Police said there was no indication of a terrorist motive, but sources had told Reuters the man had demanded to be put in touch with the Iranian embassy to deliver a message to the French government.

One source said the attacker, who appeared to be brandishing a fake weapon, had doused two hostages in petrol.

They said the hostage-taker also initially hit one person, who was able to escape.

Local media said a pregnant woman was also able to escape.

Yves Lefebvre, a police union official, said the hostage-taker also claimed he had an accomplice outside the building with a bomb.

Police swept vehicles in the area with a device but found nothing, he added.

Video on BFM-TV showed a demining device for bombs at the scene.

Police officers at the scene of an hostage-taking in Paris (AP)

It comes after a series of attacks claimed by Isis in France.