Gunman who held two women hostage in a Rye bakery has been taken into police custody.

UPDATE: A man has been taken into police custody and two guns have been seized from the cafe. It is believed the 69-year-old held up two hostages, his ex-wife and her employee, for nearly eight hours.

At 3:20pm, the man surrendered himself to the police.

The two hostages, who have escaped without injury, have been taken to a local hospital for observation.

According to ABC, Superintendent Glenn Weir said police efforts to ensure the safety of the women were successful.

“No-one’s been injured which is a great result as far as we’re concerned,” he said.

“The skill of the negotiators and our tactical operators has been shown to be successful … even though it takes a long time and it’s disruptive to the traffic and the local area in the start of the busy summer season.”

The siege seems to be an outcome of family and work-related disputes between the man, his ex-wife, 45, and her employee, 32.

“The circumstances appear to be a combination of a family dispute between the male and one of the females, as well as a relationship breakdown and a business breakdown involved the cafe as well,” he said.

The establishment, which sits on the corner of Point Nepean Road and Ozone Road in Rye, has been in lockdown all day, and police presence has caused major delays on local roads.

Earlier today, a fellow cafe owner who is nearvy the Little Beach Cafe, Anton Vigenser, has told ABC he understood the owner of the cafe was being held inside the business.

“She’d just entered her shop to start morning trade, so she hadn’t even opened, she entered her premises to get ready for the day.” he said.

“She’s a lovely lady, she opened the shop just over two years ago, she’s there every day, working hard, so this is very unusual, very very unusual.”

Emergency services were called to the cafe at 7:30am this morning.