Police were called to Poplar Tourist Park in Elderslie about 12.15pm over concerns for the welfare of a man.
Officers went to a cabin on the property and attempted to speak to a 52-year-old man.
The man then armed himself with a knife and made threats to harm himself, according to police.
Police negotiators attempted to talk the man down.
Just before 3.30pm, police entered the cabin and the man allegedly rushed at police.
Police used a taser, less than lethal rounds, which were ineffective, before resorting to firing live bullets at the man.
He was treated by paramedics on the scene and taken to Liverpool Hospital in a critical condition.
A critical incident has been declared, and a team from the NSW Crime Command’s Homicide squad will investigate the incident.
The investigation will be reviewed by the Professional Standards Command and oversighted by the Law Enforcement Conduct Commission (LECC).
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