NSW postal worker shot dead by police

A postal worker shot dead by police outside a NSW post office was "held in high regard" by colleagues, a union says.

The man was reportedly shot three times by police after moving toward them while armed with a knife at Warners Bay on Wednesday afternoon.

"Despite his long history of mental health disorders that has resulted in this horrific and tragic sad circumstance, he was always held in high regard and supported by his colleagues," CEPU branch secretary Jim Metcher said.

"Our thoughts and prayers are with his family and friends along with our local retail members who have been subjected to this horrific ordeal."

An internal police investigation with oversight from a standards body is underway.