Sydney`s Central Business District sealed after alleged knife attack

Another view from a driver inside their Mercedes Benz where you can see the man wielding a knife on Clarence Street when he is confronted by a bystander with a chair trying to stop him

Meanwhile, NSW Police on Tuesday afternoon said a man was in custody after a woman was stabbed in a hotel.

New South Wales state police said in a statement that a man was arrested, and that a woman was taken to a hospital in stable condition.

Police urged the public to avoid the area around King and Clarence Streets, in the central business district of Australia's largest city, where they were conducting an operation.

Members of the public rushed to detain the man, using milk creates and chairs, before he was arrested by police and taken to Day Street Police Station on a stretcher.

Witnesses have told AAP a young man armed with a 30-centimetre kitchen knife had been yelling religious statements.

Footage shows the man jumping on to the roof of a auto and falling to the ground when the vehicle tries to drive away, with members of the public in pursuit.

The man, who appeared to be caucasian and aged in his 20s, then fled on foot and attempted to stab "a number" of other people, police allege.

Listener Peter tells Ben Fordham the attacker was chasing another man.

In footage shared on social media, the alleged assailant can be seen jumping onto the bonnet of a auto wielding a knife.

Police said they had not yet determined a motive for the stabbings.

Paul O'Shaughnesy's first thought when he saw a blood-soaked man wielding a knife in the centre of Sydney was for the safety of others.

More footage has emerged showing the moment the knife-wielding man was restrained.

"To approach a person... with clear evidence of a stabbing previously, these people are heroes", police spokesman superintendent Gavin Wood said.

"These people are heroes, and I want to acknowledge that".

He said the man had been arrested and "the threat has been negated". "These members of the public have jumped into this situation that was extremely hostile", Wood said."They have brought this person into custody and allowed us to do our job".

"A man came around the corner carrying a knife and being chased by another five or six men", he said. "I saw people running so I ran towards him with a few other guys", Jack Huddo said on Facebook. She was found in a unit block above Clarence St Cyclery, which was forced to close after police set up a crime scene in front and behind the shop.

"There were police, people with their phone out, there were fireys trying to contain him".

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