Previously, a resident of the street, Chris Baran, said police told him it may be a few hours before he can get back home. He was told a negotiator has just arrived at the scene.
He has never noticed any suspicious activity in the area.
About 20-30 people are gathered at one end of Jessie St watching the situation unfold.
Others are gathered at the other end of the street.
here are at least eight police cars at the scene, and officers holding rifles are guarding the entrances to the street.
A witness said the callout was sparked by a naked woman with a gun.
Student Nathan Bevan said he was playing guitar in the common room when he looked out the window and saw a naked woman in her mid 30s running down the street holding a gun.
You don't see naked people with guns every day," he said.
Bevan said the woman looked "bewildered".
"I don't think she even knew what was going on."
He said the AOS arrived about 10 to 15 minutes later.