A major police operation is unfolding in a NSW town, with residents being warned to avoid the area.

A major police operation has unfolded in a central west NSW town after three people were shot dead.

Emergency services were called to Walker St, near Yelkin St, in the town of Lake Cargelligo following reports of a shooting about 4.40pm on Thursday.

Three people – two women and a man – have died, NSW Police said in a statement.

Another man has been taken to hospital in a serious but stable condition.

7 News reports the gunman is still on the run and has fled in a council-owned vehicle.

A crime scene has been established and an investigation into the circumstances of the incident has commenced.

“The public is urged to avoid the area and for local residents to stay inside,” a NSW Police spokesman said.

“More information will be provided when it becomes available.”

“Everyone is really scared”: Local resident says

Local resident Manisha told The Daily Telegraph police cars and ambulances were “all over town”.

“We have been told not to go out of our premises,” she said.

“The town is made of just two main streets – we can hear the sounds (of the sirens).”

Another local said “everyone is really scared” and that police have still not found the gunman.

“Something like this has never happened. Everyone is shocked. Everyone is scared. They are staying home.”

The MP for Barwon, Roy Butler, which covered the Lake Cargelligo has said the incident was “tragic”.

“It’s a terrible situation, and it’s still live, so we don’t have much information,” he said in a post.

“My thoughts are with the victims and their families”.

Emergency services were called to Walker St, near Yelkin St, in the town of Lake Cargelligo following reports of a shooting. Picture: Supplied

“Everything is shut in town. Every pub, every shop, IGA, food court – everything is closed,” they said.

Police have sent a geo-targeted text message to everyone in the town, advising residents to stay inside and avoid the area.

Another resident reported seeing police tape around the local pool, on Bokhara St, about 5.45pm.

Vision from the scene shows more than a dozen investigators and first responders on site.

In one frame, what appears to be a covered body is seen on the front lawn of a property.

In another, a first responder is seen seemingly consoling a bystander. The street can be seen cordoned off.

The country town of Lake Cargelligo about 564km west of Sydney and had a population of 1430 at the 2021 Census.

More to come.