More than 40 Australian Muslim groups on Monday jointly condemned a siege at a Sydney cafe in which hostages were taken by an armed man and an Islamic flag displayed.

"We reject any attempt to take the innocent life of any human being or to instil fear and terror into their hearts," they said in a statement.

The black flag shown at a window in the Lindt cafe was one commonly used by jihadist groups bearing the shahada, or profession of faith in Islam. It said: "There is no God but Allah; Muhammad is his messenger."

The Muslim groups said the inscription "is not representative of a political statement, but reaffirms a testimony of faith that has been misappropriated by misguided individuals that represent no-one but themselves".

"Any such despicable act only serves to play into the agendas of those who seek to destroy the goodwill of the people of Australia and to further damage and ridicule the religion of Islam and Australian Muslims throughout this country," it added.

"Our immediate thoughts go to the hostages and their loved ones.

"We pray for their safety and hope this matter is resolved quickly and peacefully."

Religious leaders across Australia on Monday called on their followers to unite and pray for a peaceful end to the Sydney siege.

Mosques, synagogues and churches across the country welcomed worshippers on Monday night, in what their leaders said was a show of community solidarity.

"In times of great adversity it is imperative that we remain calm, united and stand together," Lebanese Muslim Association president Samier Dandan said.