Raoul Moat has been found in Rothbury and is holding a gun to his head in a stand-off with armed police.
Moat, 37, was tracked down to Riverside in Rothbury, where eyewitnesses said police negotiators are talking to him as he sits on the ground cradling his shotgun.
Police snipers have surrounded Moat, who surfaced near allotments where a man fitting his description was seen on Thursday night.
Chief Superintendent Mark Dennett, the area commander, issued an urgent warning at 7.37pm for residents to stay indoors for their own safety.
Moat has managed to evade police for seven days after shooting his ex-girlfriend last Saturday morning and murdering her new boyfriend. He shot and wounded an unarmed police officer 24 hours later.
Locals said the police activity was centred on allotments near the town centre where a man fitting Moat's description was spotted on Thursday night.
As armed police swamped the area an ambulance arrived and made its way to the river side.
Juliette Ballantyne, from Whitton View, said she had seen snipers down by the river.
Mrs Ballantyne, who lives to the east of Rothbury town centre, said: "I am nervous. My mother in law lives nearby. I hope she's okay."
Retired taxi driver Dave Murray, 67, of Knocklaw, said Moat appeared to have been chased through the village and was heading east before being cornered at the primary school tennis courts and bowling green.
He said: "There is nowhere for him to go, the river is on one side and this road and all the police on the other."
Inshallah He Will Take Atleast 6-7Officers With Him
