The standoff between the US Federal Government and an armed militia occupying an Oregon wildlife reserve has taken a dramatic turn, with one person killed and another wounded.

CNN reports that an armed police unit intercepted a group of militia, including leader Ammon Bundy, while they were travelling to a community meetings 70 miles away.

During the standoff, two people were shot by police. Ammon Bundy's brother Ryan was wounded, and another man, LaVoy Finicum, was killed. Eight people in total were arrested.

It is unclear whether police or militia fired first.

The Bundy family have a lengthy previous history of occupations of land in defiance of Federal authorities.

It is unclear whether the current standoff will continue, or whether the remainder of the militia will surrender. The occupation has lasted 25 days to date.