A heavy police presence has cordoned off the area as investigators move in to assess the scene. "The offender has died at the scene".
Newman (pictured here on the floor) was shot dead at Maroubra Junction Hotel on Anzac Parade after he stabbed a police officer at least twice.
Nick Newman was wanted by police after he failed to turn up to court on Wednesday.
The detective sergeant, 45, has been taken to St Vincent's Hospital where he has had emergency surgery and is in a critical condition.
The detective sergeant had nearly paid "that ultimate sacrifice" for doing his job, Police Association of NSW President Scott Weber said.
"The detectives approached the 33-year-old suspect in the beer garden of the hotel and whilst arresting the male, a 45-year-old detective sergeant was stabbed in the chest and abdomen by the offender", Asst Comm. Walton said.
The traumatised officers who shot Newman remain at the scene helping with enquiries, Mr Walton said.
"It was a relatively routine situation they were in today and unfortunately that has escalated and ended in this very serious outcome", Assistant Commissioner Mark Walton told reporters in Maroubra on Friday. "It was very loud and very alarming", Ms Alexander said.
The homicide squad will now investigate all circumstances surrounding the incident, including the officers shooting the attacker, police said.
A massive response from emergency services ensued, with police, ambulance and a rescue helicopter rushing to the scene.
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The incident occurred just prior to 3:30pm this afternoon in Maroubra in Sydney's south-east.
"Right in front of us", he said.
"We don't know what's happened, who's got shot".
The Scot said he saw the police officer being brought outside and he "didn't look very comfortable at all".
An alleged child sex offender has been shot dead in a Sydney pub after stabbing a policeman who was attempting to arrest him.
Maroubra Road is closed westbound, with motorists advised to take an alternate route and allow extra time.
After the stabbing, police could be seen running to a nearby auto park and searching it with their guns drawn.
Police and paramedics have blocked off part of Maroubra Rd, in Sydney, to respond to the incident.
"Ten seconds later, a lot of policemen started running around the hotel", he said. Newman was immediately shot dead.
The investigation will be independently reviewed and a report prepared for the coroner.