Tensions in the small tourist town remain high after the most recent incident which comes after the shooting of a police officer during a robbery on Saturday.
Yesterday morning police, responding to reports of a robbery at the PNG Airlines ticketing office, foundd it locked with staff still inside the building.
A break down in communication and some misinformation led police to believe the gunmen were still in the building, holding the staff, when in fact they had locked themselves in out of fear.
Police then shut down the entire block for several hours, believing the armed gunmen were still in the building.
The Provincial Police commander for Milne Bay Joseph Morehari said it was a false alarm but police are bringing in reinforcements to hunt the killers of their dead colleague.
"I will say that Milne Bay is safe but we have a gang in town that we need to remove first before everything should go back to normal. These are cop killers we are hunting them down. We have got a special unit from Moresby here to assist us to track these people down."