Police are hunting an alleged offender who remains on the run after dumping a stolen council vehicle in Wangaratta and then allegedly stealing a white Ford Ranger from a local resident's property.

Detective Senior Constable James Howarth of Wangaratta Criminal Investigation Unit said a Whittlesea council Isuzu utility stolen in Epping overnight on 10 December was seen travelling within Wangaratta about 11am.

Police spotted the vehicle travelling towards the end of Shanley Street and the Salisbury Falls walking track, trying to drive up a hill.

After failing to get up the hill, the alleged offender, believed to be a man, abandoned the vehicle and fled to a neighbouring property where he allegedly stole and fled in another vehicle.

Nearby residents were reportedly placed in lockdown while police investigated the area in search of the alleged thief.

Det Sen Const Howarth said the suspect left in a white Ford Ranger with a black tray, a black dog box and black wheels, belonging to the owners of a Shanley Street home.

Police are investigating the incident and looking into the whereabouts of the alleged offender, who remains on the run.

Anyone who sees a vehicle matching the description or with any information about the incident is urged to contact Wangaratta Police Station on 03 5723 0888.