Armed Blackpool Police officers closed off a street in the resort following reports of a man with a gun.
Lime Grove has been shut and police have told staff at a nearby office to stay indoors.
A police helicopter was heard circling the area at around 5pm this afternoon.
Armed police stood guard at the entrance to the Department for Work and Pensions (DWP) offices off Warbreck Hill Road, North Shore, as workers headed home. The offices deal with the controversial Universal Credit, and Personal Independence Payments (PIP).
As civil servants left, the officers, brandishing rifles, remained behind, with one telling The Gazette the incident remained "ongoing".
One DWP employee, who did not want to be named, said workers were told to stay indoors until further notice at around 5.40pm.
They were allowed to leave the building at 6.40pm, 10 minutes later than usual.
A spokesman for Blackpool Police said: "Armed officers are currently in the area of Warbreck Hill, Blackpool, following reports a man had been seen with a firearm.
"Lime Grove is currently closed and there is some disruption in the area but this is being kept to a minimum.
"Although we do not believe there to be a wider threat to the public we are asking people to stay away from the area, and staff at a nearby offices have been advised to stay indoors as a precaution."
Just before 9pm last night, police released a statement on the force's Blackpool Facebook site from Supt Eddy Newton of Lancashire Police.
He said: “We understand the concern and alarm that this may have caused.
“While we do not believe there to be a wider threat to the public, I would like to reassure you that we are taking this very seriously and patrols have been increased in the area.”
“We are still very much in the early stages of our investigation. If you saw anything suspicious or have any information please get in touch with us as soon as possible.”
Anyone with information should call 101 quoting log number 1047 of 4 February.