'They want us to say things we simply can't': Martin Place hostage contacts radio host Ray Hadley

2GB radio host Ray Hadley has claimed to have spoken to a hostage being held by the gunman at the centre of the Martin Place siege in Sydney.

"I have been able to confirm that I have been talking to a hostage inside the Lindt cafe," Hadley said.

The hostage, following instructions from the gunman, demanded to be put on air live, but Hadley refused, saying he did not have the expertise to manage the situation.

READ MORE: Live coverage of the Sydney CBD siege

IN PICTURES: Hostages held by gunman in Martin Place cafe

"I'm not in a position to comply with requests that are being made," he said.

"I just can’t."

He said the ABC had also been contacted by somebody from within the cafe.

“The media cant play a role in negotiating with people believed to be from (the) Islamic State holding hostages in Sydney,“ Hadley said.

"They want us to say things that we simply can't say."

Hadley had been in contact with NSW Police Commissioner Andrew Scipione over the issue.

He also made an on-air appeal to the gunman.

"These are people that have nothing to do with what you're arguing or talking about," he said.

He told listeners there were some people inside the cafe not doing well who were "distraught".

Hadley claimed the gunman, through his hostage, said over the phone Prime Minister Tony Abbott knew "full well" why the siege was taking place.

It is feared the gunman could have as many as 50 people confined in the Lindt chocolate cafe.

At least 13 people are believed to be held in the cafe, but Lindt Australia CEO Steve Loane said the number could be much higher.

"The best information is that there's like 40 or 50 people in there, customers and employees included," he said.

The gunman has been seen using a young woman as a human shield within the cafe.

Hostages have also been ordered to face out the windows with their hands pressed against the glass.

The area around the cafe has been cordoned off to about 150m with specialist police operations officers poised outside the cafe.

Macquarie Radio has reported an alleged gunman has told negotiators that he has "devices all over the city" and wants to "speak with the prime minister live on radio".

Around 11.50am, police officers placed a ladder up against a window on the first floor of an office on the Elizabeth Street side of the same building. People then began climbing out onto an awning and then down to the ground. An elderly woman was visibly shaken as she was lead away from the scene.

There are about 200 bystanders between Martin Place and Castlereagh Street watching anxiously.