The alleged offender, Mr Newman, had failed to attend Penrith Court on Wednesday to face multiple charges, which reportedly included several counts of sexual assault.
The day before the stabbing, police issued a public appeal for information on Newman's whereabouts.
A senior NSW police officer is recovering in hospital after he was twice stabbed by an alleged child sex offender he was attempting to arrest, in Sydney's east yesterday.
When detectives attempted to arrest Newman, he lunged at a 45-year-old officer with a knife and stabbed him in the chest and abdomen.
ABC News have spoken to a witness claiming to have also heard gunshots.
According to Nine News, a police officer has been injured during the incident, sustaining two stab wounds to the chest.
Detective Breda, who has a young family with wife Kim, told the ABC a year ago that work in the child sex abuse squad was "not for everyone" but personally rewarding.
"Two other detectives have both discharged their firearm and stopped the offender who has fallen to the ground". Newman died at the scene, shortly after 3.15pm.
Police search a vehicle park in Sydney after a police officer was stabbed and a man shot dead. "There will be a lot of people very concerned about his condition", the police spokesman said.
"It was a relatively routine situation they were in today and unfortunately that has escalated and ended in this very serious outcome", Assistant Commissioner Mark Walton told reporters in Maroubra on Friday.
"It's fair to say this happened very quickly as the officers approached this man".
The sergeant was brought to St Vincent's Hospital where he underwent surgery.
Police have taped off the street outside the pub, with emergency services responding.
NSW Ambulance paramedics were called following the incident.
"Right in front of us", he said.
The attacker was shot dead by officers on the scene with witnesses saying they heard four or five shots.
"We don't know what's happened, who's got shot". There was blood everywhere, ' Mackenzie Gibbs said.
Video has been posted online of police cordoning off the area around the hotel.
After the stabbing, police could be seen running to a nearby auto park and searching it with their guns drawn.
"I immediately heard sirens and I went outside to have a look".
Noel Whelan is staying at the pub, and was nearby at the time of the incident.