Police were ordered to abandon a high-speed pursuit only seconds before the car they were chasing drove over road spikes and crashed into trees near Hamilton.

But they are defending their decision to initiate the 180kmh pursuit, and to fire a warning shot in the air to save a police dog from being strangled.

The police response is now being investigated by the Independent Police Conduct Authority.

Wanted men John Koteka and Alex Tereora, who were both injured in the crash, fled the wreck, sparking an armed manhunt through the small village of Tamahere soon after 10pm on Thursday.

Tereora allegedly assaulted two officers and choked a police dog unconscious before he was arrested.

Koteka, who was wanted in connection with armed robberies at Auckland tourist sites last month, was found in bushes a short time later.

Terrified residents were told to stay inside, lock their doors and turn out the lights as dozens of armed police swarmed the village.

The drama unfolded after police were alerted to a car travelling at speed and passing on double yellow lines near Cambridge.

Police said the driver reached speeds of around 180kmh.

After crashing into a line of trees, the two men fled, district road policing manager Inspector Marcus Lynam said.

Tereora was later found in the cab of a truck, but after allegedly assaulting an officer he escaped again. A handler then unleashed his dog on him. "The dog handler has rounded a corner to find the offender choking the dog to the point of unconsciousness and fired a warning shot from his pistol," Mr Lynam said.

The shot distracted Tereora, who released his grip on the dog's throat.

Two police officers then struggled with him before placing him under arrest.

Both men were put under police guard in Waikato hospital yesterday, where they are to undergo surgery.

Hamilton City Police Area Commander Inspector Greg Nicholls said the chase was called off at the same moment the car crashed.

"People that choose to flee from police make decisions that sometimes end up with consequences such as this. The responsibility of their actions remains on their shoulders."

He said police did not know the occupants of the car were wanted until 15-20 minutes after the crash.

Mr Nicholls also said the officer who fired his pistol made the right decision as the "tactical options open to him at that stage were very limited".

It was a coincidence that both men appeared on TV show Police Ten 7 only hours before they were apprehended.

The injured police dog's name is Louie. He was 7 and near retirement, Mr Nicholls said.

"He's done a fair bit of work for police and he's a very well thought of dog amongst our staff, and to see something like this happen to Louie, it's pretty sad for all of our staff . . . "

Louie was seen by a vet yesterday afternoon and found to be lame and tender around the hind-quarters.

One of the dog handlers suffered a knee injury, which will require surgery.

It is not yet known what charges Koteka and Tereora will be facing or when they will appear in court.

- © Fairfax NZ News