Christians are praying for Australia after the 16-hour siege of a cafe in Sydney's financial district ended in the deaths of two hostages and an Islamist gunman. 

The gunman was named as Man Haron Monis and reported to be an Iranian refugee.  The two victims were reported by local media as the manager of the Lindt Chocolat Cafe, 34-year-old Tori Johnson, and 38-year-old lawyer Katrina Dawson. 

Four were injured in the siege at the cafe in Sydney's busy St Martin's Place, and some hostages were seen being made to hold up a black banner at the window.  The injuries were reported to be non-life threatening.  

The siege ended when commandos stormed the cafe in response to the sound of gunfire coming from inside.  

During the siege, local Anglican and Catholic leaders had put out a call for prayer for the safety of the hostages as well as those attempting to rescue them.  

Speaking before the siege ended, the Anglican Archbishop of Sydney, Glenn Davies, said it was "alarming" that terrorism had reached Australia's shores.  He said he was praying for a "speedy delivery of justice for those who would seek to invade our world with such a doctrine of hate and violence". 

The Catholic Archbishop of Sydney, Anthony Fisher, called upon Australians to pray that their country remains a place of safety and social harmony.

"Two of the greatest attributes of our nation are its atmosphere of ease and safety and its history of harmony between people of different ethnic, religious and political affiliations," he said.

"Today's incident will test our determination to remain such a society. We must not allow it to turn us on each other or to undermine our sense of security.

"At Christmas we look forward to the birth of Jesus as Prince of Peace. Let us pray to him, recalling God's promise to Jeremiah: "So call upon me and I will answer you, and lead the hostages to safety."

Prime Minister Tony Abbott described the incident as "tragic beyond words". He said the perpetrator had a "long history" of violent crime, an "infatuation" with extremism and "mental instability". 

"These events do demonstrate that even a country as free, as open and as generous as ours is vulnerable to acts of politically motivated violence but they also demonstrate that... we are ready to respond," he told reporters.

Swiss chocolate-maker Lindt, which owns the cafe, said in a statement: "We are devastated by the loss of their lives and that several others were wounded and had to experience such trauma."