Police officers used a Taser on the woman at a home in Stockton

Police were called to a unit complex in Mitchell Street just after 12.30pm Thursday following reports a woman was threatening people with an axe.

It is alleged the 47-year-old woman threatened officers with the axe before barricading herself inside a unit.

A police operation blocked off Queen Street with specialist tactical officers including police negotiators, before police were able to gain entry to the property about 9.45pm.

Police said they used a number of tactical options to take the woman into custody including the use of a Taser.

She was then escorted to an ambulance, however, her condition deteriorated a short time later, and she was taken to John Hunter Hospital, where she later died.

A crime scene was established and a critical incident team from the Homicide Squad will now investigate all circumstances surrounding the incident.

That investigation will be subject to an independent review.

A report will be prepared for the information of the Coroner.

INITIAL REPORT - September 14

A POLICE operation is under way in Stockton, north of Newcastle.

Parts of Queen Street are cordoned off with police tape and there are at least 10 officers on scene.

The Newcastle Herald understands police were called to the scene following threats from a woman with an axe, including to a police officer.

At least three police cars, two ambulances and an ambulance rescue truck are on the scene at 5:30pm. The Herald understands members of the Tactical Response Team also remain on scene.

A crowd of about 15 neighbours have gathered outside the Gladstone Hotel, across the road from the scene that is unfolding on the intersection of Queen and Mitchell streets.

School children on bikes have gathered at police tape, which sections off much of Queen Street.

It is unclear exactly what prompted the late-afternoon operation.

Further details have been sought from NSW Police about the nature of the significant police presence.

A police media spokesperson said: "There is no threat to public safety, however we urge people to avoid the area."

This story is unfolding. Details will be updated as they come to hand.