A man wielding a large carving knife has been shot dead by police at a social housing estate in Sydney, prompting a critical incident investigation.

Officers were called to a unit complex at Glebe in Sydney’s inner west just before midnight on Wednesday.

They were responding to reports the man had self-harmed and officers noticed blood on the door and floor outside the unit when they arrived.

Central Metropolitan Region Commander, Assistant Commissioner Anthony Cooke, said the incident took place in a matter of seconds.

After receiving no response from inside the unit, the officers entered because of concerns for the man’s welfare.

“They were confronted by a man who came towards them armed with quite a large carving knife,” he said on Thursday.

One officer discharged a Taser which was ineffective, before another officer shot the 43-year-old man once.

He was treated by paramedics but died at the scene.

Mr Cooke said the man was close to police in a confined space.

“Where a person was armed with a knife in very, very close proximity to police … so in these circumstances that’s very difficult to judge.”

Debbie Parish, who has lived in the units for the past eight years, said there had been more disturbances since emergency housing was added to the block.

“There’s a lot of people with mental health (issues) that aren’t coping well,” she said.

“There’s been other issues that have happened since I’ve been here.”

The government last month scrapped plans to redevelop the block to include private housing.

At the time, it was said the redevelopment plan was causing unnecessary stress for tenants.

Another neighbour said the area didn’t feel safe and there was rampant drug use.

“There’s always people on the street yelling and swearing near my house,” she said.

A long-time Glebe resident, who goes by the name of Wracks, told AAP police regularly patrolled the area and were particularly focused on an underground car park at the unit block.

“They’re like the Gestapo. They need to settle down,” he said.

A critical incident team from the State Crime Command will investigate the death and an independent inquiry will also be launched.

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-AAP