Police attempting to arrest man acting erratically in New York's Times Square accidentally shot two female bystanders.

Officers were responding to reports of a man stumbling into the road on Eighth Avenue outside the Port Authority building.

"This individual was blocking traffic and appeared to be attempting to be hit by cars when a police officer on foot patrol attempted to take him into custody in the intersection," said New York Police Commissioner Raymond Kelly.

Witnesses say the man appeared deranged. "He definitely looked like he was high on something or was mentally off. He couldn't walk in a straight line. He was limping and jerking his legs around." Mike Favilla told the New York Daily News.

Officers confronted the man and he "reached into his pocket, took out his hand, and simulated as if he was shooting at them," said Kelly.

A policeman then fired at him, and missed. A second officer fired two shots, which also missed.

Video footage posted online by bystanders shows people in the packed tourist hotspot screaming and running for cover.

A 54-year-old woman who uses a walker was struck in the lower right leg and rushed to Bellevue Hospital.

A 35-year-old woman suffered a graze wound to the buttocks and was taken to Roosevelt Hospital.

Bystander Kerri Nesbeth was standing next to the woman who was hit.

"Blood was just leaking out of her pants," Nesbeth said. "She was crying out in pain and yelling, 'Help me!'"

"I hear stories when people don't even know they are shot, so I checked myself and realized it was all clear," she said.

Police chased and arrested the man. "Don't shoot him no more!" a man can be heard shouting in the footage.

It is the second time in a year that police have opened fire in Times Square and injured bystanders. In December, officers fired at a man outside the Empire State Building they believed was responsible for shooting his colleague.

Chenin Duclos, one of the nine wounded is suing the New York police department. "I was just crossing the street," said the 32-year-old. "I wasn't doing anything wrong and quickly life changed."

She is now seeking unspecified damages from the city. Her lawsuit charges that the officers "failed to follow and to exercise proper police tactics and procedures" and that they "escalated the situation into a dangerous and deadly confrontation."