UPDATED 2.13pm: Two people have been arrested after an armed stand-off in a remote Coromandel holiday hotspot.

Armed officers swooped on the normally quiet Kennedy Bay.

The local Harataunga Marae, packed with young children, was forced into lockdown and the main road cordoned off after shots were fired this morning.

At least two have been detained by police and a white Toyota Camry being driven up and down the main road is being closely monitored, according to an eyewitnesses.

Heavily armed police were now on the marae with two people in handcuffs.

Police were also talking to another person.

A police spokesperson confirmed they were dealing with an incident in the area but were keeping all details of the operation under wraps.

Ambulances had also been called to the armed incident at the remote Coromandel bay.

A tracking dog arrived at about 1pm in a police helicopter.

A woman at the marae, who did not wish to be named, said she heard several gun shots and said there were people running around with guns on the main street.

She said there were a lot of children at the marae this weekend and they were all very scared.

An elder at Harataunga Marae said police had been "running everywhere" in the past hour.

"I didn't see or hear anything but we've been told to sit tight."

About 20 people -- mostly children -- were at the marae, the elder said.

He said Kennedy Bay was a small family community with no shops or businesses.

"Nothing like this has ever happened, not in this century anyway," he said.