A man seen walking down the main street of a small town with a knife in each hand sparked a police response this afternoon, police say.

The 12.30pm incident in Milton, South Otago, was resolved peacefully, police said in a statement late this afternoon.

Police were first alerted by family concerned about the well-being of a man.

"A short time later he was seen walking along Union Street with a knife in each hand and further calls were made to the police."

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Police officers from Balclutha and Milton, along with a police dog unit, responded and two schools and a kindergarten were asked to keep children inside as a precaution.

About 1.30pm a man was taken into custody without incident, police said.

No one was hurt.

A man will appear in court tomorrow in relation to the incident.