The cafe manager killed in the dramatic final moments of a siege in Sydney was shot while trying to grab the gunman's weapon, sources say.

Tori Johnson, 34, and Sydney lawyer Katrina Dawson, 38, died following the 16-hour siege at the Lindt Chocolate Cafe in Sydney's Martin Place in the early hours of Tuesday.

Police stormed the building after explosions and yelling were heard about 2:10am (AEDT).

Multiple sources have told the ABC that Mr Johnson tried to grab the gunman's weapon when he appeared to be falling asleep.

Authorities would not confirm whether he and Ms Dawson were shot by the gunman or killed in crossfire.

Seventeen people were taken hostage by self-styled Iranian cleric Man Haron Monis shortly before 10:00am on Monday morning, but five ran free later that afternoon.

Police said three female hostages, aged 75, 52 and 43, sustained gunshot wounds and all were in a stable condition on Tuesday.

A police officer, 39, was treated for a minor gunshot wound to his face and discharged from hospital.

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Two pregnant hostages, aged 30 and 35, were assessed at the scene.

Mr Johnson's parents released a statement expressing their sorrow and thanking police and the public.

"We are so proud of our beautiful boy Tori, gone from this Earth but forever in our memories," it said.

"Let us all pray for peace on Earth."

On Tuesday afternoon Prime Minister Tony Abbott visited Martin Place, where he and hundreds of members of the public have left flowers and signed condolence books.

Mr Abbott described the siege as an "absolutely appalling and ugly" incident and said it had been one of the most difficult periods in Australia's history.

"This is an incident which has echoed around the world," he said.

"Tens, if not hundreds, of millions of people right around the world have been focused on the city of Sydney which has been touched by terrorism for the first time in more than 35 years."

Man Haron Monis had been released on bail

NSW Deputy Police Commissioner Catherine Burn said Monis was well-known to police and had a history of crime and violence.

Key points: Two hostages and gunman Man Haron Monis killed in siege

Two hostages and gunman Man Haron Monis killed in siege Tori Johnson, 34, and Katrina Dawson, 38, were pronounced dead after being taken to hospital

Tori Johnson, 34, and Katrina Dawson, 38, were pronounced dead after being taken to hospital Loud explosions and yelling were heard when police entered the cafe about 2:00am (AEDT)

Loud explosions and yelling were heard when police entered the cafe about 2:00am (AEDT) Monis held 17 hostages in the cafe, a dozen of them for more than 16 hours

Monis held 17 hostages in the cafe, a dozen of them for more than 16 hours Several hostages emerged from the cafe before police stormed the building

Several hostages emerged from the cafe before police stormed the building Police say Monis acted alone and no explosive devices were found at the cafe



Police say Monis acted alone and no explosive devices were found at the cafe Monis was an Iranian cleric on bail for a string of violent offences, including being an accessory to the murder of his wife

Monis was an Iranian cleric on bail for a string of violent offences, including being an accessory to the murder of his wife Prime Minister Tony Abbott described the siege as a "brush with terrorism" and said the perpetrator had used the "symbolism" of Islamic State

She could not confirm if the gunman fired at the hostages, or whether Mr Johnson was trying to wrestle Monis's gun away from him.

"We have not even had an opportunity to properly and thoroughly gain that information from the people who were in there," Deputy Commissioner Burn said.

"Every single bit of information will be gathered over the next period of time but it is difficult at the moment because we are dealing with people who are understandably traumatised about what has happened, and it will take us time to piece together what has occurred."

The 50-year-old gunman, who was granted political asylum in Australia, was pronounced dead after being taken to hospital.

Monis was on bail for a string of violent offences, including being an accessory to the murder of his ex-wife.

He was also facing more than 40 sexual and indecent assault charges and had a conviction for sending offensive letters to families of deceased Australian soldiers.

Hundreds of people have left flowers and signed condolence books at Martin Place. ( 702 ABC Sydney: John Donegan )

The ABC understands police seized property from the home of his girlfriend, Amirah Droudis, at Belmore in south-west Sydney on Tuesday.

Droudis was charged last year with murder over the stabbing death of Monis's wife.

NSW Attorney-General Brad Hazzard said he was frustrated that new bail laws, which may have kept Monis in custody, have been delayed.

They are due to take effect on January 28 after police and judicial officers are trained.

Sorry, this video has expired Police storm Lindt cafe

Mr Abbott said Monis had a "long history of violent crime, infatuation with extremism and mental instability".

"As the siege unfolded, he sought to cloak his actions with the symbolism of the ISIL death cult," he said.

"There is nothing more Australian than dropping in at the local cafe for a morning coffee and it's tragic beyond words that people going about their everyday business should have been caught up in such a horrific incident."

Police saved many lives: Commissioner Andrew Scipione

Just before police stormed the building, at least five hostages came running from the cafe with their hands up and one man lay down on the floor as police patted him down.

Minutes later, what sounded like gunfire and explosions could be heard.

NSW Police Commissioner Andrew Scipione said the situation changed suddenly inside the cafe, allowing more of the hostages to escape.

Police then made the quick decision to put their emergency action plan into place and they moved inside the building.

Soon after police entered the cafe, paramedic crews who had been stationed at the scene throughout the day were seen carrying people out of the building on stretchers, and one patient could be seen being resuscitated.

Thanking all the officers involved in the siege, Commissioner Scipione said: "I want to point out they have saved lives, they have saved many lives."

He said of the hostages: "I can only imagine the terror that they've been through. They are very brave people who in many cases were buying a cup of coffee and they got caught up in this dreadful affair.

"We should reflect on their courage, the courage that they displayed during the many hours in that room."

He said it was an isolated incident and urged: "Do not let this sort of incident bring about any loss of confidence of working or visiting our city.

"It was the act of an individual. This should never destroy or change the way of our life."

Westpac chief executive Gail Kelly said two of the bank's staff, and two from a "technology partner", were among the hostages.

"We are offering them all the support we can," Ms Kelly said.

Muslim groups offer prayers for victims, denounce 'nutter'

Dozens of Muslim groups have issued a joint statement expressing sympathy for the families of those killed.

Australia's Grand Mufti, Ibrahim Abu Mohammad, visited the special memorial in Martin Place and said the tragedy must not rob the nation of its values of tolerance and unity.

"We pray for the speedy recovery of all those injured and traumatised," he said in a statement.

"We are confident that with a continued display of responsibility and restraint, community harmony will be maintained."

Keysar Trad, from the Islamic Friendship Association, said the siege was the "action of a nutter", which should not be linked to global terrorism.

Monis's former lawyer, Manny Conditsis, described his client's ideology as "so strong and so powerful that it clouds his vision for common sense and objectiveness".

"Knowing that he was on bail for very serious offences, knowing that whilst he was in custody some terrible things happened to him, I thought he may consider that he has got nothing to lose, hence participating in something as desperate and outrageous as this," Mr Conditsis said.

"This is a one-off random individual. It's not a concerted terrorism event or act. It is a damaged-goods individual that has done something quite outrageous."

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Commonwealth and NSW Government buildings flew flags at half-mast on Tuesday, and hundreds of people visited Martin Place to leave flowers and sign condolence books.

One of them, inner-city worker Terri Lucia, said: "I just can't believe that it's happened to our country.

"I haven't slept all night, just wondering what's going to happen, and it's just so surreal. I'm just so shocked today."

Iranian-Australian Bibi Ehsani said Australia's Iranian community was shocked.

"[The] Iranian community were very saddened and heavy-hearted when they heard the news and when they found out the gunman was Iranian-born," she said.

"Usually the Persian-Iranian people are very soft-hearted and very loving, caring for others."

Sydney Archbishop Anthony Fisher told a service at St Mary's Cathedral that "the heart of our city is broken by the deaths of two innocent hostages".

"Hell has touched us. Only history will tell how much December 16, 2014 will affect our attitudes, behaviour, lifestyle, in this city."

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NSW Premier Mike Baird said he understood community outrage about Monis's release on bail.

"We need to understand why he was," he said.

"We also need to understand why he wasn't picked up and we'll be working closely with the Federal authorities together with our own agencies to ensure what we can do better.

"[The] community has every right to feel upset. I'm incredibly upset. I'm outraged and we need to ensure that everything is done to learn from this."

'Hostages started pouring out of the building'

ABC reporter Siobhan Heanue described hearing a volley of gunfire and screams before officers stormed the cafe.

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"The sound ricocheted throughout the tall buildings around the area... and hostages started pouring out of the building," she said.

"Some running, some able to walk, some with their hands up, and some being carried by ambulance staff."

Shortly after Monis locked the hostages inside the cafe, some were seen with their hands up while others were made to hold a black flag with Arabic writing against a window.

Heavily armed police officers took up positions in the pedestrian area, which was cleared for several blocks.

Several hours later, at about 4:00pm, two men ran from a front door of the cafe while a man wearing a Lindt apron came out of a side door.

About an hour later two women who worked at the cafe ran from the building.

The police operation has concluded and the investigation into the entire incident will be overseen by the Professional Standards Command, a police statement said.

Sorry, this video has expired Sydney siege: Hostages flee Lindt cafe in Martin Place

"All information will be provided to the coroner who will determine the cause of, and make any findings about, the events leading to the deaths," the statement said.

Lindt and Sprüngli, which owns the cafe, released a statement on Facebook thanking NSW Police and offering support to the siege victims and their families.

Chairman Ernst Tanner said: "I cannot believe that such an act of violence happened."