An Australian man has been arrested after allegedly using a stolen bulldozer to destroy a house in New South Wales with several people inside it, local media reported on Monday (8 June).

Fifty-six-year old Deborah Kerr and her two daughters were inside the house, in Teralba, south of Newcastle, when she thought she heard a refuse truck arrive at the house, she told local TV reported. They escaped from the house shortly before it was knocked down.

"He picked the [bulldozer] bucket up and started to go for the house and we just ran straight out the front door," Kerr said.

Police arrested a 48-year old man at the scene after he allegedly drove the bulldozer towards another man who had been sleeping in a shed in the garden, reports said.

The suspect is expected to be charged with several offences, including an attempted murder, local police said.

"Just gob-smacked. Couldn't believe it. Don't get in the way of a bulldozer, do you?," an unidentified neighbour told reporters.

The bulldozer was also driven over several cars, police told reporters.