Gunman is holding up to 20 people hostage in complete darkness at a cafe in Sydney

Chilling footage has emerged of a female hostage apparently trying to communicate with police by miming her throat being cut - while news channels have chosen not to broadcast a video of another hostage relaying the assailant's demands.

Witnesses described seeing the hostages looking "exhausted" and "absolutely petrified".

But as night fell and the siege entered its 14th hour the gunman turned off the lights, meaning people outside could no longer see in.

Earlier, two Arabic flags similar to those used by Islamic State were seen inside the Lindt cafe in Martin Place, the city's financial hub.

Channel Ten spoke to two hostages and said the gunman claims to have four bombs - two inside the cafe and two elsewhere in the financial district.

Police are investigating reports that the assailant has used hostages' social media accounts to demand a meeting with Australian Prime Minster Tony Abbott.

It is now thought officers know the identity of the man - who appears to be carrying a pump-action shotgun - and that he was previously known to the Sydney force.

Some of the hostages have spoken to their families on mobile phones - while five, three male customers and two female staff, have managed to escape since the siege began.

Report said the gunman had been forcing hostages to stand at the window with their hands against the glass - and that they were rotated every two hours.

The gunman - who has contacted several media outlets from the cafe and reportedly wants an IS flag delivered there - has been seen using hostages as human shields.

Police have confirmed they are working "on a footing" it is a terrorist incident - but they remain "confident" a peaceful resolution can be achieved.

New South Wales Police deputy commissioner Catherine Burn said "negotiation is in progress".

Food has now been taken into the cafe for the hostages, none of whom are thought to have been harmed.

In the hours since the siege began, a social media campaign has been trending globally, with people posting the hashtag #illridewithyou to show solidarity with Muslims.

Australian Muslim youth handed out 2000 flowers and 3600 water bottles to people in sydney #illridewithyou pic.twitter.com/DDUknU9jqr

— Zohaib Nawaz Tarar (@ZohaibTarar) December 15, 2014

In a separate development, a 25-year-old man was arrested on alleged terrorism offences in Sydney a few hours before the siege began.


Culled from Sky News