A 23-year-old man has been arrested in relation to a police officer being shot in the shoulder and arm in Hamilton.

"The man was located at a Ngaruawahia address a short time ago," police say.

They said the firearm believed to have been used in the shooting was also recovered.

The officer was recovering in hospital after being shot at about 12am today on Bankwood Rd in Hamilton, a police spokeswoman said.

During a routine traffic stop, a passenger got out of the car with a firearm and fired at the officer, the spokeswoman said.

"The officer was shot in the arm and shoulder area," she said.

The scene where a police officer has been shot. (Photo / Hayden Woodward)

The driver then fled the scene in his car and the man who had shot the officer stole the police car, the spokeswoman said.

The injured officer was rushed to Waikato Hospital where he remained in a stable condition, she said.

The Armed Offenders Squad and Eagle helicopter were deployed to assist with locating the offenders and the two cars.

"It's been hectic this morning, armed police everywhere and the helicopter flying above," a man at the scene said.

A nearby resident described waking up to a loud bang in the middle of the night.

"We didn't actually think it was a gunshot originally but shortly after that there were police officers telling everyone to get back inside so we didn't go outside," she said.

"We could hear the lights and sirens, it got quite noisy."

This morning, armed police officers guarded the area outside her house, she said.

In the two years she had lived in the area, there hadn't been any incidents she could think of that were this extreme, she said.

"It's a very quiet neighbourhood," she said.

The stolen police car, along with all police equipment carried in the car, was recovered at 2.20am on Gordonton Rd, the police spokeswoman said.

"The driver's car was located in Sherwood Drive, Hamilton just after 4am."

Police have cordoned off the area near Bankwood Rd and Wake St.

Police guard the area where a police officer was shot in Hamilton. (Photo / Hayden Woodward)

The driver was also found at this address and taken into custody, police said.

It comes just a few weeks after the one year anniversary of Constable Matthew Hunt's death.

The 28-year-old officer was shot dead in West Auckland on June 19 - making him the 33rd police officer to be killed in the line of duty in New Zealand.

Chris Cahill, Police Association President, said another officer getting shot was very concerning and his thoughts were with the officer and his family.

"Again it just highlights the risks out there that all police officers face and the fact that vehicle stops are one of the most dangerous things officers do.'

He said this event could have had tragic results and it showed there were far too many offenders out there with firearms willing to use them against police.

"We certainly pleased this hasn't resulted in more serious injury."

Police officers attending jobs alone was a problem that needed to be addressed, Cahill.

"Single-crew in vehicles is relatively common and in rural policing to some degree it is required but we would argue in metropolitan centres there is no need for that any more."