Palmerston North police say passersby have nabbed two of three youths involved in an armed robbery of a dairy in the city.

Two of the trio, brandishing a BB gun and a steel ratchet handle, demanded money from the elderly shop owner while the third waited outside.

When they were refused money they hit the dairy owner on the head with the ratchet before fleeing.

The victim was taken to hospital with non life-threatening injuries.

Sergeant Chris Allemann said passersby apprehended one of the robbers who was 16, and also grabbed the accomplice, a year older, outside the shop.

Police say they believe they know who the third offender is.