There are calls for better police training in mental health after a man with schizophrenia was fatally shot by officers after a tense stand-off at his home on the state's Mid North coast.

Key points: A neighbour said Todd McKenzie was on medication for schizophrenia

A neighbour said Todd McKenzie was on medication for schizophrenia Police say their initial use of tasers and other non-lethal actions were ineffective

Police say their initial use of tasers and other non-lethal actions were ineffective Police have launched a critical incident investigation into the death

A critical incident investigation has been launched after Todd McKenzie, 40, was shot after negotiations stalled and tactical officers stormed his Taree home, just after 10:00pm last night.

It's the latest in a series of fatal police operations involving mental health cases, including that of 22-year-old Courtney Topic, which last year led to a Coroner recommending a major review of police training.

Greens MP David Shoebridge said the shooting was symptomatic of a continuing lack of training for police in mental health issues.

"This is the latest tragic incident, and it's terribly, brutally predictable," he said.

"The great majority of police have no, or a tiny, amount of training on mental health.

"It's not a core part of the basic training for general duties for police, and they're not adequately equipped for people who are having chronic mental health concerns in the community."

'There's no excuse'

Police said Todd McKenzie was carrying a large butcher's knife when he lunged at police as they tried to enter the home.

Mr McKenzie's aunt, Francene Reo, told ABC News the death needed to be put under the spotlight.

Todd McKenzie had known mental health problems. ( Supplied )

"It's a situation that I think politicians and the general public need to have a very close look at.

"When you have somebody who has an acknowledged mental health problem and they have an incident and they end up dead — there is no excuse for it."

Assistant Commissioner Max Mitchell said police had held "extreme concerns" for the welfare of the 40-year-old when they entered the property.

"Negotiations had been undertaken for several hours they had stalled for a considerable amount of time and there was concern for welfare for this individual armed with a knife inside the house," he said.

"Non-lethal tactics by tactical police were utilised, which included the use of Tasers, but all non-lethal actions were ineffective, and unfortunately and tragically, this man was shot."

Neighbour Emma Wilson-Hodges said Mr McKenzie was an "all-round great guy" who had told her he was on medication for schizophrenia.

She said the incident started with him "going off" at one of the neighbours.

"I've never seen him like that before," she said. "He's usually pretty cool — I would never have expected that."

When police arrived, Mr McKenzie locked himself in his house, she said.

"The police were trying to negotiate for a while and then they've gone in, and I heard five gunshots and he's come out on a stretcher," she said.

"I saw them pumping his chest in the ambulance and that's when I knew he was gone."

Shooting officer 'highly trained'

Assistant Commissioner Mitchell said he was unaware if the man was known to police, or if he had a known history of mental health issues.

He said he could not specify how many police were involved in the incident, but said they would now be questioned by investigators and receive counselling support.

The shooting happened after a nine-hour stand-off. ( ABC News )

The decision-making of police and the actions of the Mr McKenzie will be investigated by Strikeforce Besborough investigators.

"I don't know the individual officers experience per se, but certainly I know this officer has been highly trained both in Sydney and in regional New South Wales."

He said he did not know if the officers involved had completed a four-day intensive training course to help police officers deal with people suffering psychosis and severe mental health issues.

"I think that the main issue here is that this is a tragic and unfortunate incident," said Assistant Commissioner Mitchell.

"No one likes to see this outcome but certainly it is tragic and unfortunate for the deceased's immediate family and we've provided the support to the family as well during the evening."

'A tragedy for police'

Mr Shoebridge said statistics obtained under the Freedom of Information act had shown that more than half of fatalities in police operations over the past 20 years had involved mental health cases.

"In many ways it's as much a tragedy for those individual police who are placed in these situations on a daily basis, without the training, without the support and without the assistance.

"When it ends in tragedy like we've just seen, police officers are often deeply distraught, deeply traumatised themselves.

"Many lives are impacted by the inadequate training and mental health resources."

Mr Shoebridge said there needed to be significant state-wide investment in 24-hour mental health crisis teams, who weren't police, to be among the first responders and equipped to de-escalate such incidents.

"Often the worse thing that you can do in a situation like this is have a series of uniformed police turn up with Tasers and guns — the situation escalates and tragedy unfolds.

"There's a systemic failure here which is going to require a systemic fix."