A 95-year-old great-grandmother died on Wednesday a week after being tasered by an Australian police officer inside her nursing home, police said.

Clare Nowland had been in critical condition in hospital since being shot with an electronic stun gun on May 17 in a confrontation that shocked Australians and made international headlines.

"It is with great sadness we confirm the passing of 95-year-old Clare Nowland in Cooma tonight," New South Wales state police said in a statement.

She passed away "peacefully" in hospital surrounded by family and loved ones, they said.

Nowland had 24 grandchildren and 31 great-grandchildren, police say.

Hours earlier, a 33-year-old senior constable was charged with recklessly causing grievous bodily harm, assault occasioning actual bodily harm, and common assault over the incident.

The policeman, who has been suspended with pay, will face court on July 5.

Police Commissioner Karen Webb said Nowland's family had been informed of the "serious charges", and thanked detectives for working quickly following the "nasty incident".

Officers had been called to Yallambee Lodge nursing home in southern New South Wales by staff who told them that a woman was "armed with a knife".

Police say they urged Nowland to drop a serrated steak knife before she moved towards them "at a slow pace" with her walking frame, prompting one officer to fire his taser at her.

The incident has led to calls for a New South Wales parliamentary inquiry and the release of police bodycam video of the confrontation. (AFP)