The incident started on Saturday evening when paramedics were called to an apartment block in Haberfield where a man had been stabbed.

Police then discovered that a fight had broken out and up to five men involved in the brawl were holed up inside an apartment on the corner of Ramsay Street.

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Ramsay Street and Wattle Street were closed in both directions as specialist police were brought in to negotiate with the people inside the unit.

Several Haberfield residents contacted Fairfax Media to say that there was a "hostage situation".

Matt Martel, a Fairfax employee, was nearby and said that traffic has been diverted from the City West Link.

Any updates on the situation in #Haberfield? Ramsay, Wattle and Frederick Streets all blocked and police helicopter flying overhead.— Amy Hume (@MissAmyable) September 5, 2015

"Everyone spilled out into the street and all the traffic has been diverted," Mr Martel said.

"There's a helicopter flying overhead.

"People are saying there's a man in the unit and he has hostages, but we can't tell."

Hostage situation in Haberfield. Photo: Steve McNally

Another witness, Steve McNally, said that the man in question was on the roof of the building, throwing tiles at police.

An Ambulance Service of New South Wales spokeswoman told Fairfax Media that at 10.30pm paramedics responded to reports of an assault and ambulance staff were still on the scene at 1.40am.

According to police, four men inside the apartment left on their own accord and are now speaking with authorities.

The stand-off ended when a 31-year-old man who had been hiding in a roof cavity was arrested at 4:40am on Sunday morning.

Another man is being treated in hospital with non-lifethreatening stab wounds.

All closed roads have now been reopened.