Locals next to the scene of a deadly shootout with fugitive Tom Phillips have described the moment they were awoken early Monday morning

Authorities say Phillips' children are safe and healthy after their father was shot dead by police on Te Anga Road in western Waikato.

Clive and Sandra Morgan's property borders the scene where the shooting took place and say their daughter woke to four loud gunshots in quick succession.

They've told us shooting isn't uncommon in the area - but knew it was something more serious when they heard it in the early hours.

One officer remains in Waikato Hospital with serious injuries.