BREAKING NEWS: Two trams crash in Sheffield
Eyewitnesses said it happened at about 4.30pm in the Middlewood Road area of Hillsborough.
Pictures of the collision show how trams appear to have scraped alongside each other.
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Hide AdOnlooker Matt Mclennan said: "One of them has derailed by the looks of it.
"The traffic is backed up with cars and buses right back to where the Hillsborough Barracks are."
He added the collision was between a tram heading for Middlewood and another on its way to Halfway.
Brian Hodkinson was also at the scene and took some pictures.
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Hide AdHe said: "The road is still blocked with no police presence yet.
"I think they stopped just in time to stop anything major.
"Passengers seemed fine on the trams."
The road is reported to have been temporarily closed.
Stagecoach Supertram tweeted: "Services now running to and from Hillsborough.
"No service from Hillsborough to Middlewood or Malin Bridge."
Police have arrived at the scene.