A possible double-murder suspect has been shot dead by police after a wild shootout and car chase that unfolded around families out walking in central Tauranga.

Police shot dead on Thursday evening the man they wanted to speak to in relation to a double homicide at McLaren Falls, near Tauranga, earlier this week.

District Commander Superintendent Andy McGregor said police tried to stop a car on at 7.46pm on Carmichael Rd in Tauranga in relation to the fatal shooting of the two men on Tuesday.

The car failed to stop and McGregor said a gun was fired at police.

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A police car parked behind the car driven by the offender who was fatally shot by officers. Photo / SNPA
A police car parked behind the car driven by the offender who was fatally shot by officers. Photo / SNPA

"The vehicle fled toward the CBD, and continued to fire shots at police. The vehicle then stopped and an occupant continued to discharge the firearm."

"Police returned fire and in the exchange the offender was fatally wounded."

One witness told the Herald he could see a man's body on the ground and a nearby car appeared to have been run off the road.

Armed police stood near the man's body.

"There were police in black, like what the Armed Offenders Squad wears."

Armed police have shot dead a man following a police pursuit in Tauranga. Photo / Supplied
Armed police have shot dead a man following a police pursuit in Tauranga. Photo / Supplied

It is believed no one else was in the vehicle.

Residents reported hearing shots and seeing police with guns and ambulances rushing towards the area.

One person said there were "a number of families out walking" as the shots were being fired out the window of the fleeing car.

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"(It was) bloody lucky no one got hit."

Police at the cordon around State Highway 2 in Tauranga. Photo / Alan Gibson
Police at the cordon around State Highway 2 in Tauranga. Photo / Alan Gibson

Witness Shianne Ormsby said she saw "a huge amount of police respond" to the situation.

"Little did I know they'd be a few metres from my house blocking off the main set of lights, all while being armed."

Mike Dork, who works in the area, said he saw up to 10 undercover police cars screaming southbound down SH2.

"Every cop in the area looks to be here," he said.

Another resident said she heard multiple rounds of gunshots ring through the air and the rush of police cars chasing the offender.

Cordons are in place at the intersection of 15th Avenue and Cameron Rd, Tauranga. Photo / Sandra Conchie
Cordons are in place at the intersection of 15th Avenue and Cameron Rd, Tauranga. Photo / Sandra Conchie

McGregor said there was no further risk to the public.

A large section of State Highway 2 in Tauranga from Bethlehem to Judea will remain closed today, a police statement said.

The highway was closed from the Moffat Road roundabout in Bethlehem until near the CBD.

Police remain in the area this morning.

"Residents in the Bethlehem area heading to the Cameron Rd or Elizabeth St areas, or toward the harbour bridge, will need to travel via State Highway 29 (the toll road), or via Brookfield," a police statement said.

Diversions are in place, but motorists are advised to avoid the area or delay travel if possible.

Police Minister Stuart Nash warned residents on Wednesday that they should expect to see more armed police in the street following Tuesday's double shooting.

He said the escalated response was a temporary measure aimed at tackling the latest flare-up between gangs.

"Expect to see police openly carrying their Bushmaster rifles and Glock pistols. Expect to see police wearing their new body armour," he said in a statement.

"Expect to see the Eagle helicopter in the air. Expect to see police executing search warrants at gang properties and stopping vehicles carrying gang members and associates."

Police have blocked access to State Highway 2 in Tauranga. Photo / Alan Gibson
Police have blocked access to State Highway 2 in Tauranga. Photo / Alan Gibson

Tuesday's homicide was the latest in a series of brazen shootings involving semi-automatic firearms, with a suspected arson along a row of the Bay of Plenty shops last month.

Nash said the Government was pouring more resources into policing the Bay of Plenty, targeting gangs and organised crime.

Detective Inspector Mark Loper said a scene examination was ongoing at the property of Tuesday's shooting with support from forensic specialists and an Auckland specialist search group.

He said additional investigation staff were being brought in from around the country to assist Bay of Plenty police.

SH2 Southbound is expected to remain closed overnight with police presence in the area. Photo / Sandra Conchie
SH2 Southbound is expected to remain closed overnight with police presence in the area. Photo / Sandra Conchie

The dead men are believed to be Paul Lasslett, 43, who owned the property, and Nick Littlewood, 32.

Loper said yesterday police were still working to understand the circumstances of the deaths and the involvement of any other parties.

"While police have spoken to a number of people in relation to the incident, we believe there may be others who are yet to talk to us."

Tauranga Mayor Tenby Powell told Newstalk ZB he wanted to see the situation unfold further before he commented on tonight's shooting.

"I'm very proud to be part of this community; the police are doing a great job under incredibly difficult circumstances."

SH2 remains closed near Tauranga

NZ Transport Agency has advised State Highway 2 remains closed between Waihi Rd off ramp and Cameron Rd this morning, following the fatal police firearms incident last night.
Takitimu Drive has reopened.

These closures are expected to remain in place well into the day.

Detours are in place. City-bound traffic from Bethlehem should turn left onto Waihi Rd, turn left onto SH2 ramp for Takatimu Drive north or continue on Waihi Rd and turn right onto Cameron Rd for SH29A south.

East-bound traffic should turn right onto Waihi Rd from Cambridge Rd, turn left onto SH2 ramp for Takatimu Drive north or continue on Waihi Road and turn right onto Cameron Rd for SH29A south.

People travelling from Paeroa northward are encouraged to consider using State Highway 1 and State Highway 29, or State Highway 27 and State Highway 29 over the Kaimais.

Motorists should avoid unnecessary travel, consider working from home where possible and expect delays.

People are encouraged to visit the Transport Agency's Journey Planner website for up-to-date information about the closure and detour.

The Transport Agency thanks motorists for their patience.