"New South Wales (NSW) Police and the Australian Federal Police are currently responding to a reported hostage taking incident in Martin Place in Sydney," Xinhua quoted Abbott as saying.
"I have spoken with NSW Premier Mike Baird and offered him all possible Commonwealth support and assistance."
"The National Security Committee of the Cabinet has also convened for briefings on the situation," said the prime minister.
"This is obviously a deeply concerning incident, but all Australians should be reassured that our law enforcement and security agencies are well trained and equipped and are responding in a thorough and professional manner," he added.
Abbott also confirmed that the federal government would provide further updates as further information becomes available.