A gunman who fatally shot at least 12 people, including two children, in Montenegro has killed himself while surrounded by police, officials said on Thursday.

At least four others were wounded in the shooting rampage in the western town of Cetinje on Wednesday that followed a bar brawl, officials said.

The shooter, identified as 45-year-old Aco Martinović, killed the owner of the bar, the bar owner's children and his own family members, Interior Minister Danilo Šaranović said.

The attacker, who was fled after the rampage, was later located and surrounded by police. He died after shooting himself in the head, Šaranović said.

Police had dispatched a special unit to search for the attacker in the town, which is located about 30 kilometres northwest of the capital, Podgorica.

All the roads in and out of the city were blocked as police swarmed the streets.

Šaranović said that Martinović had died while being taken to a hospital in the capital and succumbed from the “severity of his injuries.”

The government has declared three days of national mourning starting on Thursday, with Prime Minister Milojko Spajić describing the shooting as a “terrible tragedy.”

“The level of rage and brutality shows that sometimes such people ... are even more dangerous than members of organized criminal gangs,” Šaranović said.

Martinović was at the bar throughout the day with other guests when the brawl erupted, Police Commissioner Lazar Šćepanović said. He said that Martinović then went home, brought back a weapon and opened fire at around 5.30pm.

“He killed four people” at the bar before heading out, and then continued shooting at three more locations, Šćepanović said.

He said the suspect received a suspended sentence in 2005 for violent behaviour and had appealed his latest conviction for illegal weapons possession. Montenegrin media have reported that he was known for erratic and violent behaviour. (AP)