Police allege a man was driving east on The Boulevarde around 1pm on Sunday when he got out of the car, approached another vehicle with two women inside and started stabbing it.

Two male senior constables working in the nearby police station responded to a Triple Zero call and attended the nearby service station at the corner of Cary Street. Police said a man with two knives approached the officers, who used pepper spray and batons.

"A number of shots were discharged by police; however, the man was uninjured, and two officers suffered stab wounds - one to the leg and the other to the hand," police said in a statement.

The officers were taken to John Hunter Hospital, where they remained in a stable condition on Sunday.

Police said one of the officers was released overnight.

A man, 25, was arrested and was charged overnight with two counts of wound with intent to resist arrest, destroy or damage property, common assault and breach of bail for drug offences.

He is due to face Newcastle Local Court on Monday.

Bystanders completing their community service came to the officers' aid by helping restrain the man so the injured police, who had placed him in handcuffs, could tend to their wounds.

Lake Macquarie Police District Commander, Superintendent Danny Sullivan, said he was "exceptionally grateful" to the bystanders - including Mount Hutton's Joel Roberts - who came forward "with no regard for their own safety".

"This is Toronto on a Sunday - what the hell," Mr Roberts said.

Police are investigating the circumstances of the incident.

Police Association of NSW acting president Kevin Morton said officers risked their lives to protect the community and the incident reflected the reality of the dangers of the job.

"All police officers in NSW are dedicated to protecting the communities they live and work in," he said.

"The constant and prevalent challenge is that every time an officer is targeted and attacked the wider responsibility of protecting the protectors is being weakened.

"The time has come when these behaviours and offences need to carry the maximum weight of the law when offenders are put before the courts and for stronger sentencing to help deter violence directed at police."

He said the association was supporting and providing welfare assistance to the officers and their families.

Superintendent Sullivan said he was "exceptionally proud" of the two officers for the "courage they displayed, the way they executed their duty" and their "dedication and bravery".

"Police know when they put on their suit of blue and do their job to protect their community, it's ever present in their mind that each day they have at work could in fact be their last.

"Whilst those things are front of mind for all police officers, no one wants to confront the situation they had here today."

Mr Roberts, a father of three, was in a van of people "on our second chance" doing community service jobs and driving along Cary Street when he saw a man standing in his boxers outside the Caltex service station. The van pulled in and passengers alighted for a "breather".

"All of a sudden he started towards me and a couple of the other guys, he started yelling and screaming," Mr Roberts said.

"He was extremely agitated."

Mr Roberts said he returned to the van and was shutting the door when he saw the man was armed with a knife. He reopened the door when he saw the officers confronting the man.

"They pulled their batons out and started pepper spraying him but it was not successful," he said.

"He crouched down to get under the baton... and has stabbed them in the upper legs multiple times.

"One [officer] who was stabbed three times tried to back off and try to regain himself.

"He [the man] chased after him [the officer]...and the other officer was chasing behind him.

"That's when they drew their side arms.

"He threw the knife away and I yelled out 'He's unarmed'.

"Myself and another guy tackled him to the ground.

"We knew he did not have anything on him to hurt anyone and we knew we had enough people to take him down. We had one guy on his back, another guy on his leg and I had my boot on his throat.

"They came and restrained him with handcuffs and we said 'He's not going anywhere, go and sort yourselves out'.

"A guy pulled up in a ute and had a ratchet strap to use as a tourniquet."

Scott Fenton, from Blackalls Park, said he was driving along The Boulevarde and was about to turn left into Cary Street when he came across an empty white car stopped across two lanes.

He said he saw a man he presumes was the driver on the footpath.

"He was walking like he was really angry and cranking up his shoulders sort of thing."

Mr Fenton said he saw an officer one or two metres from the man "walking over with his arms up like he was holding a taser or gun" and then heard between two and four gunshots.

"Around Toronto you don't really hear about much happening at all," he said. "It's shocking to know this kind of thing can happen."

NSW Ambulance duty operations manager Inspector Mark Gardiner said paramedics on scene had a "tough job".

"There was a lot of blood - but they worked hard to ensure the best outcome," he said.