The Police have surrounded a law firm and evacuated the heart of a Sydney suburb after a man reportedly took a child -possibly his own daughter - as hostage.

There were unconfirmed reports that he had a bomb, although police would not comment.

"At this stage it is not known what caused the man to attend the building or what he is in possession of," a police statement said, adding that roads in the Parramatta area of western Sydney had been closed and buildings evacuated.

A police spokesman added that negotiators were at the scene, which is near the city's Family Court precinct, as well as ambulance crews and firefighters.

Television footage showed the middle-aged man without a shirt on but wearing a lawyer's wig looking out an office window.

A witness cited by Australian Associated Press said the man claimed to have a bomb after entering the lawyers' offices with a girl.

"He said he was looking for a certain person," said the woman, a clerk at Arthur Phillip Chambers who declined to be named.

"I told him he wasn't here, I told him he is not a client of ours, I do not know him.

"When I told him there was nobody here by that name he went up to the next level of the building then came back down... and he asked for the person again.

"I said, 'I'm saying he's not here'. He then went to the front of the building and said 'call the Attorney General's department, call (this person) and tell them I've got a bomb in my backpack.'"