A man holed up in a shed for hours with a suspected homemade shotgun claimed he had a bomb, before he was shot dead by police.

The seven-hour siege with police at a rural property in Daisy Hill, near the Victorian town of Maryborough, on Thursday was triggered by an earlier near-miss shooting.

The 39-year-old shooter, who is believed to live nearby on Menzies Drive, allegedly fired a gun at an older man and narrowly missed him.

When local officers arrived, he allegedly hid inside the shed, threatened to shoot police and claimed he had a knife and bomb or explosives.

Victoria Police’s Critical Incident Response Team, Special Operations Group and Dog Squad were called but were unable to resolve the stand-off.

The man stepped out of the shed just before 10pm and shot at police, Western Region Assistant Commissioner Mick Grainger said.

In an exchange of fire, he was hit and died at the scene.

Grainger said it was too early to say how many shots had been fired at police.

“A number of shots were fired in the exchange with police,” he said on Friday.

“But who fired what, at what time, I cannot tell you.

The identity of the shooter has not been confirmed. His connection with the older man and what sparked their confrontation was not revealed.

No police or community members were injured in the gun fight.

“It’s alleged that it (the gun) was some form of homemade firearm,” Grainger said.

“My reports last night were that it was a shotgun.”

The owners of the shed were not home at the time of the siege.

“He was unknown to the owners of that shed … and was in that shed for an unknown reason,” Grainger said.

Police are still investigating whether the bomb threat was legitimate.

Grainger described the man’s behaviour as “unusual” and said efforts to negotiate with him were fruitless.

“He certainly made threats, he wasn’t enamoured with the presence of police, he wanted us to leave,” he said.

There is no ongoing threat to the public and police say they are not looking for any other offenders.

Homicide Squad detectives will investigate the fatal shooting with oversight from the Professional Standards Command, as is the standard procedure.

The state coroner has also visited the scene.

It is the latest in a spate of police shootings in Victoria.

Madeline Margaret Henry, 33, was shot dead on May 24 in South Melbourne after allegedly driving towards a male senior constable during the arrest of a machete-wielding man.

Somali man Abdifatah Ahmed was also shot dead at Footscray in Melbourne’s inner-west on April 17 after allegedly rushing at police with a knife.

-AAP