A heavily-armed gunman remains on the run after a police pursuit ended in a deadly siege on the NSW Central Coast.
Police began tracking a stolen car that rammed into another vehicle near Hamlyn Terrace, north of Gosford, about 10:00am.
When the two men failed to stop, officers began a pursuit along Minnesota Road before they turned into a dirt fire trail off Warnervale Road.
The Land Cruiser was set on fire before the two men fled into bushland and onto a semi-rural property where they became surrounded by tactical officers.
NSW Police said one of the men pointed a gun at an officer before the officer fired several shots, killing the gunman.
The other man managed to get away, sparking a major manhunt across the Central Coast.
Parents were able to pick up their children from school after a lockdown was lifted, but residents are still being advised to remain inside their homes.
Some concerned parents were unable to pick up their children on Thursday morning.
One witness described hearing what he thought were fire-crackers before his car was surrounded by police when he approached the scene.
Angela Chivers had been walking with her young son to enrol him in school on Thursday morning when the police operation began unfolding around them.
"It's pretty full on. There was at least sort of 30 cop cars … plus the helicopter," she said.
"We didn't hear the shots because the helicopter was so low, so all you could hear was the helicopter."
Sean Walker said he saw smoke rising from a nearby property and thought there had been a plane crash until he saw the armed police response.
"Far out, this is the Central Coast, this is not the US," he said.
Aerial footage appeared to show a body on the ground at the property, covered by a sheet.
NSW Police said the identity of the dead man was not yet known.
Assistant Commissioner Max Mitchell said officers "acted professionally" during the incident.
He said the man aimed at officers before they were forced to open fire.
"From my briefing, my view is very clear, police have acted professionally," he said.
"In fact, I believe their actions have been very courageous considering the actions of the offender.
"Having a double-barrel firearm pointed at you, fear of life, there can be no more strenuous position for a police officer to be placed into."
