SYDNEY (REUTERS) - Australian police said on Monday they are monitoring alleged demands made on social media by hostages being held in a siege at a Sydney cafe and the"situation is contained in one area".

Network 10 reported that two female hostages had called with claims from the gunman that two bombs were planted elsewhere in the city. Social media posts by alleged hostages claimed the gunman wanted to speak directly with Prime Minister Tony Abbott.

"That is forming a part of our tactical response in how to handle this," Deputy Police Commissioner Catherine Burn said of the reports, declining to comment on any demands from the hostage-taker. She said people should go about their business as normal in Sydney.