Residents in a small King Country town besieged by gang violence remain on edge tonight after two men arrested over an alleged campaign of terror were bailed back to their homes.

One Te Kuiti resident said some witnesses were now too scared to give police statements after learning the men had been allowed to return to the town, and locals were keeping weapons in their cars or at the front door for protection.

Earlier in the day the relief among residents and business owners was palpable after Armed Offender Squad teams from Auckland, Waikato and the Bay of Plenty swooped on seven houses in an early morning raid on Wednesday, arresting four men and netting a swathe of guns, cannabis and gang patches.

But a ratepayer said the relief was short-lived after two of the men were bailed back to Te Kuiti.

"I just feel gutted that they've let them out. They're just wrecking our town."

She said people who had been prepared to give statements on incidents yesterday were now no longer prepared to because of alleged standover tactics used against them in the past.

Court documents show the four arrested men, aged 41, 46, 49 and 53, are jointly charged with demanding with menace four Harley Davidson motorbikes or $80,000 from a member of the Te Kuiti Motorcycle Club overnight on August 18.

The Herald understands a man allegedly suffered a broken jaw, while a business owner was stood over in an alleged extortion in a separate incident.

There was evidence at the motorcycle club today that measures had been taken to prevent entry by unwanted visitors. Handles had been removed from outside doors and a large pile of gravel poured on a driveway to prevent vehicles entering the grounds.

"It's just been horrendous," said the woman, who did not want to be named for fear of retribution.

"It's terrifying. People are arming themselves. I know they are."

Te Kuiti's iconic sheep shearing statue. Photo / Brett Phibbs

She said people had been hiding property allegedly targeted by the group, understood to be a cutaway gang of the Mongrel Mob and not affiliated to the King Country chapter.

"This is my home town and they've just wrecked it. They've terrorised this town for the last two months."

Earlier in the day Waitomo District mayor Brian Hanna said Te Kuiti residents and business owners had been fearful over the alleged campaign of intimidation and violence but the arrests had brought relief.

"There was real anxiety about the town because this sort of behaviour was pretty serious, very intimidating," Hanna said.

Many of the 29 business owners and the town's 4000 residents felt frustrated and frightened over the escalating incidents.

The "posse" was allegedly led by a man who had returned from Australia to Te Kuiti, Hanna said.

It was unclear if that man had been deported from Australia under its tough new rules to deport New Zealand-born criminals, even if they have spent the majority of their life in Australia.

Hanna said residents were largely pleased with Wednesday's raids.

"There was a feeling of, 'We've had a gutsful of that behaviour'," Hanna said.

Other charges against the foursome included assault with intent to injure, threatening to cause grievous bodily harm, robbery, wounding with intent to cause grievous bodily harm, theft [four counts], participating in an organised criminal group [four counts], and threatening to kill [seven counts].

Police would not comment today as the matter is now before the courts.

However, a long-time business owner who did not want to be named said the police action was welcome.

"Certainly there's been some pretty nasty things going on around town. And it's a huge relief to have such a big police presence enforcing the law in town."

She claimed some of the gang had allegedly walked into shops and helped themselves to goods without paying.

"It's been violent and it's been ugly."

PhibbsAfter news of the arrests made headlines yesterday, an elderly resident was contacted by her granddaughter in Australia concerned that Te Kuiti was "in lockdown".

The woman said the Mongrel Mob had had a large presence in the town for decades but this was a breakaway group that she wanted to see stopped.

"We need to keep on top of them really because we can't have gangsters dictating our lifestyle."

Te Kuiti was a tight-knit community that had a lot to offer law-abiding residents, she said.

From jobs and affordable housing to sports clubs, hobby interests and aged-care facilities, there was plenty to like about Te Kuiti, she said.

Te Kuiti Superette owner Shaan Ali and wife Nitasha said their adult children witnessed a "scuffle" between some of the gang and a business owner about four weeks ago.

One of the Te Kuiti properties raided by police and the AOS. Police arrested four men on multiple charges, including robbery, assault and threatening to kill. Photo / Brett Phibbs

They had arrived in Te Kuiti 18 years ago and built up a small portfolio of commercial buildings.

The Muslim couple said they had never been threatened by any gang members but they had three emergency alarms in case of robberies.

Nitasha Ali said the people of Te Kuiti had been kind and embraced the family, who had set up a mosque in the town for about 12 households of Muslim families.

Hanna said Te Kuiti police visited some of the victims of the alleged violence following the arrests to relay the good news.

In town it was business as usual today while a "gang pad" in an old bottle store on the Esplanade appeared empty.

A red rag tied to a barbed wire fence blew in the cool wind, windows were covered and a couch and chairs sat empty at the headquarters which formed part of the raid.

Hanna said residents were completely supportive of police.

"There's still two more the police are looking for and they'll find them. And we just support their actions totally."

He said Te Kuiti's favourite son, former All Black the late Sir Colin Meads - whose statue takes centre stage on the main street - would have had no respect for the gang activities.

"Colin would have been pretty unimpressed with their behaviour and he would have said, 'They need a clip round the ears'."