An investigation was underway on Wednesday after a man was shot dead following an armed siege by police at a house in the fashionable Chelsea area of London.

The incident in Markham Square, just off King's Road, began at the start of Tuesday's evening rush hour and forced the closure of a section of Chelsea's popular shopping street.

During a standoff lasting five hours, there were three exchanges of fire between the gunman and armed police.

When officers finally stormed the building, the man was found dead inside. It was not clear if he had been shot by officers or if he had killed himself.

The Independent Police Complaints Commission (IPCC) said it was now investigating the fatal shooting of a 32-year-old man.

"Metropolitan Police Service firearms officers entered a house in Markham Square and found the man," it said in a statement. "He was taken outside and given first aid and an ambulance called. The man was pronounced dead at the scene."

Police had earlier brought in a negotiator to try to talk the gunman out. No hostages were involved.

It is not known what sparked the incident although police ruled out robbery and burglary as a motive.

Witnesses reported seeing the man carrying a shotgun and they said he had fired more than half a dozen shots.

A bus driver told Reuters about eight police cars suddenly appeared as he was travelling down King's Road.

He stopped the bus immediately. "Passengers ran for their lives," he said. "I felt terrified. I immediately thought there was somebody with a gun."

Residents in nearby houses were told to lock their doors and stay away from windows.

Fatalities involving the use of firearms by police must be investigated by the Independent Police Complaints Commission.

The area around King's Road, a fashion centre of Swinging London in the 1960s, contains some of the most expensive homes in the capital.