A man will appear in court on Monday after he was charged following a siege in Carrington.
Police from Newcastle Local Area Command were called just after 6am on Sunday to 48 Young Street, following reports a man inside a single-level house with two women was armed with a firearm.
One woman left the house shortly after police arrived at the scene.
Officers closed part of the street and asked residents to stay inside their homes.
Newcastle police, with the assistance of NSW Police Negotiators and officers from the State Protection Support Unit, spoke to the man and he surrendered about 10am.
No one was injured during the incident.
Anastasia Grib lives nearby and said neighbours could hear police asking the man to come to the front of the house and then guaranteeing him his safety if he left with his hands in the air.
Ben Maddox walked to the scene from a few streets away after reading about the incident on social media.
"I've got three kids and I'm very worried and very shocked," Mr Maddox said.
"I didn't expect this type of thing to happen here."
Other neighbours said the man lived in the house with his mother, his sister and her two children.
Police searched the property, where they allegedly found a shortened firearm, a bicycle believed to have been stolen, tablets and a crystal substance believed to be illicit drugs.
All items were seized for forensic examination.
The man, 23, was charged with possessing a shortened firearm and ammunition, not keeping a firearm safe, and goods in custody.
He was refused bail and will appear in Newcastle Local Court on Monday.