Plan to give Monis flag dropped: inquest

Senior police discussed giving Lindt Cafe gunman Man Haron Monis an Islamic State flag in the hope he would release hostages but decided against the move, fearing it would prompt him to become violent.

Monis had made the demand after taking 18 people hostage at the Martin Place cafe but given what had been observed about "IS methodology" overseas it was deemed too risky, the commander of the NSW Police State Protection Group, who cannot be named, on Thursday told the coronial inquest into the December 15, 2015 siege.

"(Police wondered) would that then cause him to do something and do it in the name of ISIS," the officer said, adding "it could cause him to become violent".

The commander made the comments while being questioned over the police response to the siege, and like other senior officers to previously address the inquest spoke about the "contain and negotiate" strategy adopted.

He was initially in favour of providing Monis with the flag, but after a "robust" discussion with other senior police agreed it might encourage the gunman to react violently.

"That was a concern," the commander said.

He also restated his hope of a peaceful resolution, even after Monis first fired his shotgun at 2.03am, more than 16 hours into the terrifying ordeal.

"Being a removed observer ... my first impression was this potentially was a warning shot and we should try and regain some kind of communication," he told the inquest.

On Wednesday, the commander told the inquest he wasn't aware a second shot had been fired at 2.11am, and believed the one that killed Mr Johnson at 2.13am to be the second shot.

He agreed the first shot could have triggered an emergency action plan for officers to storm the cafe, but it wasn't his call and thought there needed to be more situational awareness.

Just 28 minutes before the first "warning shot" was fired during the siege, senior police believed the situation was stable and it might even remain calm until daylight.

But 10 minutes later, tactical operations officers were forced to storm the cafe when manager Tori Johnson was shot point blank by Man Haron Monis.

Monis was killed in the ensuing gunfight that also claimed the life of barrister Katrina Dawson in the early hours of December 16, 2014.

The inquest continues before NSW Coroner Michael Barnes.