The Port Arthur killer is believed to be an intellectually disabled man from Hobart and last night was holding a Tasmanian couple and an interstate visitor hostage at a cottage near Port Arthur.
Police Commisssioner John Johnson late last night said the toll stood at 33 confirmed dead, including Asian victims, believed to be Japanese and other overseas tourists.
Police believe the death toll could be higher as more victims are found.
The killer, in his early 20s, picked his way through Port Arthur in a deadly shooting spree, armed with an M16 Armalite automatic rifle and other weapons.
He moved from the Port Arthur toll booth at the entrance to the Broad Arrow Cafe, and then to the local guest house.
Police established contact with the man through a secure phone hook-up. He apparently has no prior convictions.
"We are trying to negotiate with him but we haven't heard from him for a few hours. He has fired at police," Mr Johnson said.
The son of the hostage couple last night was briefing the police on his parents' background at police headquarters.
The killer also fired at rescue helicopter at the scene. The heavily armed Police Special Operation has the man surrounded in a siege 4 km north of Port Arthur at Seascape Cottages.
Special Operations Group officers were being flown in to Tasmania last night from NSW and Victoria to relieve local SOG officers at the siege.
Mr Johnson said the massacre was "probably premeditated" and considered it possible that the man might take his own life.
Police have been unable to approach the killer's car because it is "considered to be in a dangerous situation", according to Mr Johnson.
"I can't discuss what his demands are. He has links with Port Arthur, in terms of property ownership and one or two people from there who know him."
Mr Johnson said close family of the killer were being taken to police headquarters in a bid to regain contact with him and have them speak to him.
"This is a devastating human event, unheard of in our own country. What makes a human being do this to other, I can't understand," Mr Johnson said.
"I can understand a one-to-one, but this number is incomprehensible."
He said that no doubt the Government would look closely at the gun laws issue.