The family of the 22-year-old knife-wielding woman fatally shot by police in Sydney's west yesterday say they are struggling to cope.

Courtney Topic, from Carnes Hill in Sydney's west, was shot dead yesterday outside a Hungry Jack's outlet in West Hoxton, on the corner of Cowpasture Road and Hoxton Park Road.

Ms Topic had Asperger's Syndrome, an autism spectrum disorder characterised by difficulties in social interaction and reading non-verbal cues.

Today, family and friends visited her parents' home with gifts of flowers and groceries.

Ms Topic's mother reportedly collapsed in grief on being informed of her daughter's death, while the officer who fired the fatal bullet is "distraught" over the incident.

Penrith man Robert Duncan, who witnessed the tragic incident, told News Corp Ms Topic had come close enough to stab an officer before being shot in the chest.

"The woman then started moving towards them in a zombie-like fashion and the police kept their guns on her and kept moving back, she came towards them wielding and swinging a knife," Mr Duncan said.

Other witnesses have said Ms Topic, who was carrying a large butcher's knife and drinking from a soft drink cup, had been darting in and out of traffic before being approached by police.

Following the single shot, she died almost immediately at the scene.

Capsicum spray and a taser were used in failed attempts to subdue Ms Topic - the former rendered ineffective by her glasses.

Officers go over the scene where a 22-year-old woman was shot in Hoxton West outside Sydney. (9NEWS) (9NEWS)

Officers go over the scene where a 22-year-old woman was shot in Hoxton West outside Sydney. (9NEWS) (9NEWS)

Police had been called to the restaurant at West Hoxton shortly before midday after reports Ms Topic was armed with a kitchen knife and was threatening people.

She had earlier been causing a disturbance at nearby Carnes Hill.

Assistant Commissioner Frank Mennilli told reporters witnesses were concerned by the woman's behaviour.

"They rang Triple-0 on a number of occasions, saying a woman was walking around with a large kitchen knife," he said.

"A number of tactical options were undertaken by police.

Police have cordoned off the area where a woman died in West Hoxton. (9NEWS) (9NEWS)

Paramedics attempted to treat the woman at the scene. (9NEWS) (9NEWS)

"Capsicum spray was utilised, and they tried to utilise a Taser.

"One of the police officers was ordered to use the firearm, rendering one shot to the chest."

Witness Ashton Tuimaseve said he saw Ms Topic lunge at police before she was shot.

"She was standing around and I think they tried to talk to her a little bit and she kind of lost it," he told 9NEWS.

"She started charging the male officer and the male officer was backing up, it looked like he was unwilling to do anything.

"Then he fired one shot and it hit her in the chest. She stood around for a good three or four seconds and clutched at her chest, then she just dropped."

Highway Patrol officers blocked off parts of Cowpasture Rd while the investigation took place. (9NEWS) (9NEWS)

The Hungry Jack's restaurant is one of several large fast food outlets at that intersection. (9NEWS) (9NEWS)

Mr Tuimaseve said while his condolences went to the family of Ms Topic, he understood the threat the officer was under.

Meanwhile, Asst Commissioner Mennilli would not be drawn on the detail of the incident.

He repeatedly said he could not answer questions from reporters as they were "matters for the critical incident team to investigate".

A critical incident is defined by NSW Police as one involving death or serious injury involving police.

"A team from the State Crime Command's Homicide Squad and assisted by investigators from South West Metropolitan Region will now investigate all circumstances surrounding the incident, including the woman's actions prior to police intervention and the discharge of a firearm," a police statement read.

"That investigation will be overseen by the Professional Standards Command."