Chinese police have shot and killed a bus hijacker in northwest China after he took a group of Australian tourists hostage.

A spokeswoman for the Australian Embassy in Beijing says all of the hostages escaped unharmed.

Armed with explosives, the man seized 10 Australian tourists and a local translator.  Nine were later released, but a 48-year old Australian woman and the Chinese translator remained with the hostage-taker until police agreed to his demand for another vehicle.

China's official Xinhua news agency says police shot and killed the hostage-taker, Xia Tao, after negotiations failed and he had driven off in the second vehicle.  Police say the man was a worker in Xian, but have yet to give a reason for his actions.

The standoff with police lasted about two hours and took place in the center of Xian city in China's Shanxi province.

Xian is a popular tourist stop in China and near the site of the famed terra-cotta army where thousands of life-sized figures of warriors and horses are preserved in a tomb with China's first emperor.

Some information for this report was provided by AFP, AP and Reuters.