Inspector Stephen Cooper said witnesses told police several gun shots were fired on Derby Street, near housing commission flats, at about 12.20pm on Thursday.

"Victoria Police received calls from the public in relation to shots fired ... this is an active investigation and I cannot say exactly where the shots have been fired," Inspector Cooper said.

A manhunt is underway for a gunman, after witnesses said they saw the offender/s fleeing the scene in a black hatchback.

No one was harmed in the shooting, but one witness said he heard gun shots being fired at the unit next to him.

Marco Daou, who lives behind the commission flats, said: "I woke up to gunshots, the first was very loud and nearby."

"I shut my door and window, and then within two minutes another two gunshots," Mr Daou said.

"There were six or seven gunshots within five minutes. The unit next to mine almost copped a bullet."

Another witness said he saw a man with a gun in his hand, on Derby Street around the time of the shooting.

"I've seen the man, with a pistol in his hand, after I saw him I hid... because we suspected he might want to kill a lot of people," the man told Channel Seven.

Resident Colleen Howell said she heard four gun shots on Derby Street.

She said there was no doubt that the sound was gunshots.

"We hear fireworks all the time here, loud bangs, it was definitely gun shots."

Holy Rosary Catholic Primary School was put in lockdown shortly after, but has since resumed classes.

Police have closed off part of Derby Street - between Hampden Road and Wolsley Parade.

Inspector Cooper said police were investigating whether the gunshots fired in Kensington were connected to an aggravated burglary in North Melbourne.

"We had reports that a person or persons entered a North Melbourne property by force," he said."We're currently investigating whether the two incidents are linked.

"We know that police responded at 12.20pm to two incidents."

He said police were investigating what type of weapons were used in the burglary, which happened in a flat on Wilson Mews.

Two men were home at the time, and police are yet to reveal what weapons were used.

"We have no reports of a fire arm being used or shown at the incident in North Melbourne," Inspector Cooper said.

Two laptops were stolen and the investigation is ongoing.

Anyone with any information is urged to contact Crime Stoppers on 1800 333 000 or submit a confidential crime report at www.crimestoppersvic.com.au