At least 12 people have been killed by gunmen reportedly armed with Kalashnikovs and a rocket-launcher who opened fire in the offices of the French satirical weekly newspaper Charlie Hebdo.

French officials said 11 other people were injured, at least four seriously, in the shooting at the central Paris offices about 11.30am (local time) on Wednesday.

Two police officers and ten journalists are thought to have been killed.

It is understood the gunmen initially burst into number 6 rue Nicolas-Appert in a Paris neighbourhood, where the archives of the Charlie Hebdo are based, shouting "is this Charlie Hebdo?" before realising they had got the wrong address.

The men then moved quickly down the road to number 10 around noon (local time) and fired at reception staff before moving to the second floor where journalists and cartoonists were holding an editorial conference.

Sorry, this video has expired Charlie Hebdo shooting: Video of armed gunmen in Paris street

"The two men opened fire and coldly killed the people in the conference room, as well as the police officer in charge of protecting [cartoonist] Charb, who did not have time to react," a police source said.

Only one person survived, by hiding under the table, according to police.

The deputy mayor of Paris, Patrick Klugman, said the killers knew exactly who they were looking for.

"Two shooters enter into the press room and pick the journalists, asked for their names, and shot bullets in their head," he said.

A manhunt is underway for a total of three masked men who escaped the scene. Their hijacked getaway car was later found abandoned on the outskirts of the city.

A raid by France's elite anti-terrorist unit was under way late on Wednesday in the north-eastern city of Reims.

A member of the anti-terror unit at the scene of the raid said either the suspects would be able to escape, or "there will be a showdown".

According to a police source two of the gunmen are brothers from the Paris region. The third man is believed to be from Reims.

A police document identified the men as Said Kouachi, born in 1980, Cherif Kouachi, born in 1982, and Hamyd Mourad, born in 1996.

In a video filmed by journalist Martin Boudot, who was taking refuge on a nearby rooftop, the men can be heard shouting "Allahu Akbar" (God is greatest) between rounds of gunfire.

Police said another witness heard the attackers shouting "we have avenged the prophet".

Another short amateur video broadcast by French television stations showed two hooded men outside the building. One of them sees a wounded policeman lying on the ground and strides over to him to shoot him at point-blank range.

Sorry, this video has expired Video of armed gunmen from a distance

In another clip on Television station iTELE, the attackers are heard shouting "We have killed Charlie Hebdo. We have avenged the Prophet Mohammed."

The pair can then be seen calmly walking over to a black car before driving off.

The gunmen fled towards the eastern Paris suburbs after hijacking a car, police officials said.

It is the worst militant attack on French soil in recent decades.

Charlie Hebdo has been at the centre of repeated controversy around its publication of cartoons lampooning the Prophet Mohammed and its offices were firebombed in 2011.

Dozens of police and emergency services were at the site as police secured a wide perimeter around the shooting scene, where a car could be seen riddled with bullet holes.

Police union official Rocco Contento described the scene inside the offices as "carnage".

French president Francois Hollande rushed to the scene of the attack and the government said it was raising France's security warning to the highest level.

"This is a terrorist attack, there is no doubt about it," Mr Hollande said.

"An act of indescribable barbarity has just been committed today in Paris. Measures have been taken to find those responsible, they will be hunted for as long as it takes to catch them and bring them to justice.

"They will be pursued for as long as is necessary in order that they be arrested and put in front of a court and a judge so they can be prosecuted."

A source close to the investigation said two men "armed with a Kalashnikov and a rocket-launcher" stormed the building and "fire was exchanged with security forces".

The source said the gunmen hijacked a car and knocked over a pedestrian as they sped away.

(L to R) Charlie Hebdo editor-in-chief Stephane 'Charb' Charbonnier, and cartoonist Jean 'Cabu' Cabut. ( AFP )

A man who lived close to the newspaper's offices described what he saw from the window.

"I was at home, I heard gunshots. At first I thought it was the Chinese New Year but it wasn't the date. I looked through the window and I saw police officers playing hide and seek with the criminals and I understood it was a shooting," he said.

"I saw people hiding in the subway station and I gathered something serious was going on."

Sources at the newspaper said the deceased included co-founder and cartoonist Jean Cabut, editor-in-chief Stephane 'Charb' Charbonnier, deputy chief editor Bernard Maris, and cartoonists Georges Wolinski and Tignous.

"About a half an hour ago two black-hooded men entered the building with Kalashnikovs," one witness told French iTELE TV News.

"A few minutes later we heard lots of shots," he said, adding that the men were then seen fleeing the building.

Charlie Hebdo (Charlie Weekly) is renowned for courting controversy with satirical attacks on political and religious leaders and has published numerous cartoons lampooning the Prophet Mohammed.

The last tweet on its account mocked Abu Bakr al-Baghdadi, the leader of the militant Islamic State, which has taken control of large swathes of Iraq and Syria.

The publication gained notoriety in February 2006 when it reprinted cartoons of the Prophet Mohammed that had originally appeared in Danish daily Jyllands-Posten, causing fury across the Muslim world.

Its offices were fire-bombed in November 2011 when it published a cartoon of Mohammed under the title "Charia Hebdo".

Armed gunmen face police officers in the street outside the Charlie Hebdo offices. ( AFP PHOTO: Anne Gelbard )

Despite being taken to court under anti-racism laws, the magazine continued to publish controversial cartoons of the Muslim prophet.

In September 2012 Charlie Hebdo published cartoons of a naked Mohammed as violent protests were taking place in several countries over a low-budget film, titled "Innocence of Muslims", which was made in the United States and insulted the prophet.

French schools, consulates and cultural centres in 20 Muslim countries were briefly closed along with embassies for fear of retaliatory attacks.

Mr Charbonnier had received death threats and lived under police protection.

'Possibility of other attacks'

"There is possibility of other attacks and other sites are being secured," Mr Contento said.

Sirens could be heard across Paris as prime minister Manuel Valls said security was being ramped up at transport hubs, religious sites, media offices and department stores.

Sorry, this video has expired Aftermath of the terror shooting attack in Paris

Danish media group JP/Politikens Hus, whose newspaper Jyllands-Posten has also published cartoons depicting the Prophet Mohammed, has increased its security level.

Jyllands-Posten published the cartoons in 2005, sparking a wave of protests across the Muslim world in which at least 50 died.

"If the perpetrators are still at large, we're going to track them down, and we're going to work with the French to do that," a White House spokesman told MSNBC television.

World leaders were united in condemning the attack on Charlie Hebdo.

British prime minister David Cameron described the attack as "sickening" and German Chancellor Angela Merkel said the shooting was not only an attack on French citizens, but on freedoms of press and speech.

The Department of Foreign Affairs and Trade said consular officials were in contact with French authorities to confirm no Australians were affected by the attack.

A Department spokesperson said Australians in Paris should remain vigilant and should follow the instructions of the French authorities.

Australians travelling to France are encouraged to monitor the travel advice on the Smart Traveller website.

A police car is left riddled with bullets after the attack on the offices of Charlie Hebdo. ( AFP )

Local Muslims denounce attackers as 'barbarians'

France last year reinforced its anti-terrorism laws and was already on alert after calls from Islamist militants to attack its citizens and interests in reprisal for French military strikes on Islamist strongholds in the Middle East and Africa.

The attack, as yet unclaimed, comes amid what a number of commentators have identified as rising xenophobia in Europe, with thousands of protesters in several German cities rallying earlier this week against Muslim immigration.

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France's five-million-strong Muslim population is Europe's largest.

"I am extremely angry. These are criminals, barbarians. They have sold their soul to hell. This is not freedom. This is not Islam and I hope the French will come out united at the end of this," said Hassen Chalghoumi, imam of the Drancy mosque in the northern Paris suburb of Seine-Saint-Denis.

Late last year, a man shouting "Allahu Akbar" injured 13 people by ramming a vehicle into a crowd in the eastern city of Dijon.

French officials say several attacks were prevented in recent weeks.

The last major attack in Paris was in the mid-1990s when the Algerian Armed Islamic Group (GIA) carried out a spate of attacks, including the bombing of a commuter train in 1995 which killed eight people and injured 150.

However, the Islamic State insurgent group praised Wednesday's attack saying the raid was revenge for insults against Islam.

"The lions of Islam have avenged our Prophet," Abu Mussab, a Syrian who fights with the Islamic State, said via an internet connection from Syria.

"These are our lions. It's the first drops - more will follow," he said. He added that he and his fellow fighters were happy about the incident.

A map showing the location of the anti-terror raids in Reims in France. ( Google Maps )

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