Armed police respond to Spotswood siege

An armoured police vehicle was used in a two-hour stand-off in Melbourne's inner west. (ABC News)

A man has been arrested following a major police operation involving an armoured vehicle in Melbourne's inner west.

The stand-off lasted around two hours before the man surrendered.

Residents said there was a significant police presence, including Australian Border Force officers.

Officers arrived just after 8am today and began negotiating with a man, believed to be armed, inside a Hudsons Road property in Spotswood, 10 kilometres west of Melbourne's CBD.

Victoria Police said it took about two hours for the man to surrender.

A street in Melbourne's inner west was blocked for several hours as police responded to an allegedly armed man. (ABC News)

He was arrested by members of the Special Operations Group without incident about 10:20am.

Australian Border Force officers and the dog squad also responded to the incident.

Neighbours along Hudsons Road and neighbouring streets waited anxiously on Friday morning until the siege was resolved.

Spotswood resident Daniel Livingstone was moving house when the police raid began a few doors down.

"There was a large police presence, federal police, dog squad by the looks of things, all dressed up in tactical gear, and they came out in force with a megaphone," he said.

"He didn't wish to come out, so there was a good couple of hours there where there was a bit of a stand-off."

Daniel Livingstone was moving house when the raid began a few doors down. (ABC News)

Mr Livingstone said police barricaded themselves behind four-wheel drives.

"It became apparent that the gentleman had a gun inside, so they were making sure things were done slowly and cautiously, trying to get the situation to end safely," he said.

Mr Livingstone said Spotswood was normally a "really nice, quiet suburb", but that a raid had taken place at the same house about a year ago.

"So we'd seen it happen before, but this time it seemed a bit more of an escalation, a bit more dramatic," he said.

Within the past week or so, a business was also bombed about 500 metres away, he said.

"I love the area, but I'm going to enjoy getting out of the city for a bit."