Two people have been arrested after an armed stand-off with police in Taupo today.

Police said they were preparing to execute a search warrant at the Acacia Bay house when they saw a man outside the house pointing what appeared to be a firearm at the police Eagle helicopter.

The armed offenders squad was called.

Police said two men from the property were taken into custody shortly after 5pm.

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They initially said there was at least one person still inside the property, which a witness told the Herald was on the cordoned-off Reeves Rd.

However, police later said a search of the property confirmed there were no other people at the address.

Cordons had been placed around the property.

Reeves Rd resident Elma Mohlmann has been watching the drama unfold over several hours.

"There's a helicopter going round and round and [police] are stopping cars coming down from the dead end of the road and looking in their boots.

"I was afraid earlier, when you've got cops running around with guns, but I'm not now."

Police had not been to her door, but her husband had not been able to return home this afternoon, Mohlmann said.

He had retreated to the pub, she said.

"He's been there since 4pm, but he doesn't mind."

A worker at a nearby restaurant earlier today told the Herald police remained at the scene.

The Bay Bar and Brasserie head chef Mitch Hoyles said nearby Reeves Rd was cordoned off and he had seen armed police.

A helicopter was also circling the scene but the restaurant remained open.

"We asked police 'do we need to lock the doors?', but they said no, they had it contained."