The incident near Llangeitho continued into the night
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Armed police have surrounded a farmhouse with two people inside after council officials were threatened and cars reportedly set on fire.
Witnesses in Llangeitho, near Tregaron, Ceredigion, said they saw a crossbow after a row over a fence escalated.
Trouble broke out after council officials arrived at the house during Wednesday to removed a wooden fence.
Officers surrounded the property in the hamlet of Stagg's Head. Negotiators are trying to resolve the situation.
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The existence of the fence had been the subject of complaints by members of the public for some time
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The occupants of the farmhouse or smallholding, which lies between Llangeitho and Lampeter, were reported to have moved into the area several years ago.
Neighbours said the family involved were a mother and three sons and they had since gained a reputation for being very protective of their property.
It has been reported that the family built a heavy wooden fence near to the road about which there had been objections.
Llangeitho is in a normally quiet rural area of mid Wales
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At about 1100 GMT on Wednesday, council officials arrived at the property with a legal notice and a digger in tow.
It is believed two of the brothers were in the house, with the rest of the family elsewhere.
A Ceredigion Council spokeswoman said: "An incident took place near Llangeitho, Tregaron, when council officers were threatened and the private vehicle of one of the officers was damaged.
"The situation is being controlled by the police and there is no current risk to members of the public or council officers.
"Council workers had commenced action to remove a row of posts and fencing material which had been erected without permission along the carriageway of the B4578 by an adjoining landowner.
"The existence of the fence had been the subject of complaints by members of the public for some time."
Dyfed-Powys Police blocked the road leading to the village
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A spokesman for the ambulance service said: "The police have surrounded a house, but we have not been involved yet. We are at a rendezvous point nearby."
Witnesses reported hearing loud bangs from the area of the property.
For several hours, a police helicopter circled above the rural area but had landed as darkness fell.
Insp Mark James said: "Police officers attended with employees of the local authority in relation to a boundary issue and threats were made and vehicles were damaged.
"The incident is ongoing and will hopefully lead to a peaceful outcome."
He said negotiators were at the scene and there were no hostages involved.