Police on Wednesday declared a critical incident after Tuggerah Lakes Proactive Crime Team officers were engaged in a pursuit earlier in the day.

Senior police will address the media in Newcastle about the incident.

The Mitsubishi Lancer they were following rammed the police vehicle on Tuggerah Parade at The Entrance about 10.20am

Officers terminated the pursuit before the vehicle was spotted again on Tuggerah Parade.

Police said they spotted a man and woman run from the vehicle and "officers noticed the man was in possession of two firearms - a long arm and a pistol".

A foot pursuit continued towards Gosford Avenue before a confrontation.

"Initial reports suggest shots were fired by the man and a police officer, which left the man with a wound to his neck," NSW Police said in a statement.

Paramedics treated the 30-year-old man before flying him to the John Hunter Hospital in a critical condition.

Northern Region police commander Assistant Commissioner Max Mitchell said the man was carrying a "long-arm" gun and a pistol.

Assistant Commissioner Mitchell said two shots were fired - but who fired and when "needs to be investigated thoroughly".

"He was challenged by police on a number of occasions," he said.

"There was good communication at all times with this individual and at a point in time, when challenged, there were two gunshots."

Assistant Commissioner said the incident and the lead-up was captured on body-worn video.

"It shows in particular the individual ... being given instructions, called upon by police - by his first name - to lay down the arms and stop," he said.

Resident Patricia Riveiro was at a property nearby when she heard police yelling and a commotion outside.

"I saw the police chasing and screaming," she said.

"Then shots, it was loud. I don't know who shot because they were all running.

"They put him [the man who was shot] into the ambulance that drove to the helicopter park at the bowling greens next door.

"They are still here investigating and the streets are still taped off no cars are allowed to leave my building."

Lake Macquarie police are examining all of the circumstances around the shooting, with their inquiry subject to an independent review.

Two firearms were secured and will undergo ballistic examination.

Police arrested a 43-year-old woman on Broonarra Street a short time later.

She was taken to Wyong Police Station.

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