Three hostages have been freed so far from  Café Petticoat where the armed man threatened to blow himself up.

"The situation is not over yet," police said nearly six hours into the incident at Café Petticoat as quoted by NL Times.

The municipality confirmed that one person was still being held hostage inside the bar, the news portal reported.

Authorities have reportedly evacuated residents from houses located close to the cafe.

The city centre was also shut down.

The motive behind the situation or a terror attack angle has not been established so far.

Police have directed people to stay away from the spot.

Café Petticoat is a popular nightclub in the town.