SCHOOLCHILDREN stood and watched as a woman wearing a balaclava raided a North-East newsagents armed with a knife.

The female is believed to have leapt over the counter at Low Grange News, in Billingham, shortly after 8am this morninf to steal lottery scratch cards, cash and cigarettes.

She threatened a member of staff with a knife but the employee managed to escape out of a rear entrance of the shop.

Local teenagers who had stopped off on their way to school saw the drama unfold.

The youngsters from the nearby St Michael's School were shaken but unharmed.

As the robbery took place Cleveland Police was inundated with calls from worried residents.

Police officers, sniffer dogs and the Cleveland Police force helicopter, were scrambled to the scene.

A 32-year-old woman and a man in his 40s were arrested on suspicion of armed robbery an hour later at a bus stop in Low Grange Avenue, Billingham.