Armed police swooped on a quiet cul-de-sac after reports a woman was being held at gun-point in a flat.
Scores of people living in Trafalgar Close, Peacehaven, were banned from entering or leaving their homes between 9.25am and noon yesterday.
Neighbours were kept inside as officers and police dogs entered a top floor flat in Beresford House.
Other officers blocked the entrance to the close while paramedics stood by.
After an-hour-and-a-quarter, a woman wearing pyjamas and a dressing gown was escorted from the flats.
One neighbour described how she “was really crying”.
Twenty-five minutes later officers led a man in handcuffs to the front of the close.
Another eyewitness said officers came out of the property carrying a knife.
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Neighbours said the pair were boyfriend and girlfriend.
A Sussex Police statement said: “A man was arrested after armed police officers were called to a flat in Peacehaven where it was reported that a woman was being held at gunpoint on Thursday morning.
“Police were called to Beresford House in Trafalgar Close at 9.24am.
“At 10.43am a woman was brought out of the property, followed by a man at 11.10am.”
Superintendent Grenville Wilson added at the time of the incident: “We are confident that there is no danger to the public and the incident has been contained.
“The allegation has not been substantiated and following a search of the property, no firearm has been found. As a result, armed officers were stood down shortly after 11.30am.”
At the time of going to press a 24-year-old man from Peacehaven was in custody having been arrested on sus- picion of possession of a bladed article and production of cannabis.