Tense moment masked man who took 37 hostages on a bus in Rio de Janeiro is shot dead by a police sniper after a three-hour standoff and cops then discover it was a toy gun

A man has been killed by a police sniper after he held dozens of people hostage on a public bus in Rio de Janeiro Tuesday.

William Augusto Nascimento boarded the bus at 5.25am brandishing what appeared to be a firearm to hold 37 people hostage on a busy bridge linking the suburb of Sao Gonçalo to downtown Rio de Janeiro. It was later discover that the weapon was a toy gun. 

The masked abductor suspect threatened to set the vehicle on fire in the middle of a bridge.

Cellphone footage shows Nascimento being shot at 9.04am as he stepped out of the vehicle.

He went into cardiac arrest and was transported to a local hospital where he was declared dead. 

The hijacker allegedly identified himself as a member of the Military Police, but officials later said he worked as a security guard

According to police reports, Nascimento told the bus driver to drive to Rio. 

During the standoff he released three passengers - including two women - within two hours of taking control over the bus.

Rio de Janeiro's elite police force, known as BOPE, led the negotiations and spoke directly to the man when he initially got off the bus at 7.45am before he quickly went back inside.

The kidnapper, who reportedly was also carrying a knife, threw a box out of the bus and then released another woman who immediately passed out at 8.20am. 

The man did not made any particular demands and appeared to have 'psychological problems,' a spokesperson for the traffic police said on TV Globo. 

Eliziane Terra told Brazilian outlet G1 that she was awoken by a text message from her husband notifying her that the bus was hijacked. 

'We are living in a land without law. We go to work and do not know we will come back,' Terra said. 

'My son goes to work, my husband too. I pray to God every day, but we are at His mercy. We know we will leave, but we do not know if we will return.'

The husband of one of the hostages said that the gunman never threatened to harm any of the passengers. 

Governor Wilson Witschel congratulated the police for an 'exemplary performance' in a Twitter post but said he regretted the death of the hijacker.

The bridge that connects state capital Rio with the city of Niteroi across the bay is a major commuter thoroughfare, and the hijacking during the morning rush hour triggered travel chaos in the region.

TV images showed massive traffic jams on the bridge, which was swarming with armed security officials.

Sao Gonçalo is a violent, impoverished suburb separated from Rio by Guanabara Bay.