It comes after the country's highest Islamic office holder, Grand Mufti Ibrahim Abu Mohamed, said he and the Australian National Imams Councils (ANIC) were devastated.
"The Grand Mufti and the Australian National Imam Council condemn this criminal act unequivocally and reiterate that such actions are denounced in part and in whole in Islam," Professor Mohamed said in a statement.
And a statement on behalf of about 50 prominent organisations within the Muslim community denounced the actions.
"We reject any attempt to take the innocent life of any human being, or to instil fear and terror into their hearts," it said.
"We pray for a swift resolution to this crisis with no injuries or loss of life."
However, groups such as the Australian Defence League have also taken to Facebook to express their views.
"Here it is folks, homegrown islamic terrorism in our backyard, courtesy of successive australian governments and their brainwashed voters," it said.
Meanwhile on its Facebook page, Rise Up Australia Party wrote: "The embedded Islamic terrorists are still milking fear."
NSW Premier Mike Baird and police commissioner Andrew Scipione earlier said they had been having conversations with with Islamic leaders on Monday.
"They expressed their full confidence and support with what the NSW police are doing and the Commissioner and I thank them for it," Mr Baird said. "We are in this together."
When asked about the possibility of reprisal attacks, Mr Scipione said police were working with community leaders.
"Reprisal attacks are something that should not happen," he said. The Muslim groups said the black flag hostages have been forced to hold against a window in the cafe where they are being held has been misappropriated by "misguided" people.
