Police have cordoned off the area surrounding the Headlands Hotel in Opunake, while a gunman holds a staff member hostage, believed to be his former girlfriend.

An armed officer stands by in the small coastal township of Opunake - the siege began around 9.30pm last night.

At 5.45am a helicopter circled the hotel premises and landed in the town centre on State Highway 45.

The Headlands Hotel in South Taranaki where the siege is taking place - police have been negotiating with the gunman through the night.

Poised to act, an armed offenders squad member maintains his position - over 30 officers have been deployed.

Police officers had been negotiating with the man by megaphone.

Armed police shut off the streets around the hotel.

Police brought the Special Tactics Group into Opunake this morning.

Armed police cordoned off the streets around the hotel.

Some houses near the hotel were evacuated by police this morning.

Police used helicopters to sweep the area this morning.

Dozens of heavily armed police moved into the small Taranaki town.

Police have named the armed man who was shot dead by police today after holding a woman hostage at a coastal Taranaki hotel.

Anthony Ratahi, aged 46, from Stratford was shot and killed as he struggled with a police dog.

Inspector Pat Handcock told media the man was shot once and died at the scene. He was armed with what was thought to be a handgun.

SUPPLIED ANTHONY RATAHI: Shot dead by police after taking a hostage in Taranaki.

Ratahi has previously been charged with assaulting a woman using a knife and injuring with intent to cause grievous bodily harm.

Ratahi had left Opunake's Headlands Hotel this morning, after which the altercation involving a police dog took place.

While Handcock said the man remained agitated and uncooperative throughout the drama, police had earlier told Stuff that he had been ''calm and talkative''.

ON THE HUNT: Armed Offenders Squad members search for a gunman in Opunake

Ratahi's body remains at the scene and cordons remain in place at the hotel.

Officers stormed a small villa next to the hotel at about 10.20am, and loud yelling and bangs, believed to be shots, were heard.

Area commander Terry Van Dillen said the victim, believed to be Ratahi's former girlfriend, was shaken, but safe.

The woman, who had minor injuries, was being interviewed by police, along with other witnesses.

More than 30 members of the armed offenders squad, including the Wellington-based Special Tactics Group, were involved in the operation.

Three separate police investigations have been launched into the incident.

One team will focus on the incident that occurred last night and Ratahi's actions.

A second investigation will independently look at the actions of police, which is a matter of course when a police firearm has been discharged and resulted in a death.

A third element will be to look at the general police policies and procedures, which is also a matter of course when there has been a police shooting.



Those investigations will be overseen by Detective Superintendent Andrew Lovelock.



Police have also made contact with the IPCA and they have appointed an investigator.

The stand-off began last night, when Ratahi stormed into the hotel's restaurant and pulled out a rifle.

"He was yelling at us to get out and I just yelled at the girls to move, move, move and we all ran for the front door," said witness Kathy Muggeridge.

"As soon as the guy saw police approaching he pulled out a gun and that was when he pointed it ... and told us to go."

Witnesses said they saw the gunman beating up a waitress and dragging her across the floor.

Taranaki acting area commander Terry Van Dillen said Ratahi, who was known to police, had initially taken several hostages.

He released some of them, but kept hold of a female waitress, who is believed to be his former girlfriend, and took her to a room in the hotel.

Van Dillen said police have been talking to the gunman through the night.

"He is talkative. He is very calm. We are having good negotiations with him," Van Dillen said.

Early this morning, the man could be heard yelling at police.

''You come over here, sonny boy - I'll shoot you first,'' he said.

Van Dillen said those who had been in the restaurant when the man burst in were interviewed by police.

The $2 million Headlands restaurant is just off Highway 45, at the clifftop of Opunake's beach, 65km south of New Plymouth.

It houses a restaurant, cafe, commercial kitchen, and conference facilities on the ground floor, with three standard suites on the second floor and honeymoon suites on the third floor.

A second block has four standard suites.