Police have been searching a number of homes in the Yorke Peninsula town of Wallaroo as they continue to look for a man they shot at on Monday afternoon.

A manhunt for the armed man is in its second day after some residents spent the night at the town hall.

South Australian police have been searching for the man since they tried to pull him over on the Spencer Highway early on Monday morning.

He was spotted by officers later in the day in Wallaroo, when police say he produced a handgun.

An officer fired a shot at the man, who then ran off.

Police have a revoked a “dangerous area” declaration for part of the town bounded by Cornish Terrace, East Terrace, Ryan Street and Gouge Street, and instead replaced it with a new area bordered by Matta Street, Cornish Terrace, Hughes Street and Gardiner Street.

They have asked the public to avoid the area.

More than a dozen residents spent the night at Wallaroo Town Hall with the Salvation Army providing food.

“I’ve been locked out since 1.30pm – can’t go home, [my] little dog’s at home, two budgies out in the freezing cold, my son’s work clothes on the line and I don’t like it,” Patricia Bean said.

“I tried to talk [police] into letting me go home and them come home with me and I could lock myself in but they wouldn’t [let me].”

Bonnie Knibbs said she was not happy about the situation.

“But I guess when there’s stuff going on in the street you’ve got to do what you’re told,” she said.

Some residents have been able to leave the cordon to go to work this morning but others have been unable to return home.

The wanted man is described as about 160 centimetres tall, with light brown hair and brown eyes.

Police said he was wearing black pants, a black windcheater with a white motif on the front, and a black cap.

Senior Constable Dave Muir said police did not believe he was injured when he was shot at yesterday afternoon.

“We are asking residents to make sure that they keep their properties secured, particularly those from overnight, and if anyone sees a man matching his description, don’t approach him and just call police on triple-0.”

Wallaroo resident Paul told ABC Radio Adelaide he saw the armed man run past him yesterday.

“We were working on my mate’s car in the driveway and then the guy ran straight past us with a gun in the hand and he jumped my back fence,” he said.

Police said to hide behind a car

“We were dumbfounded. We didn’t say anything to him cause as soon as we seen the gun we thought ‘better not say anything or he might shoot us’,” Paul said.

The Civil Aviation Safety Authority has banned low-flying aircraft from within five  kilometres of the Wallaroo town centre.

Police said a media helicopter was seen flying in breach of the air exclusion zone.

“If this is your helicopter, please desist and leave the area immediately,” a spokesman said in an email to the media.

-ABC