A British family settling down for a dinner party were held up by an armed gang who burst into their house and threatened their 5-year-old daughter.

The gang of up to five men, all wearing hats or hoods with scarves covering their faces, demanded that the terrified owners and their two guests tell them where they "kept the drugs."

The family could not give the gang what they wanted because the men had targeted the wrong home in Croydon, South London.

Frustrated at their lack of success, the gang threatened to hurt the young girl and a shot was fired.

The family and friends were waiting for another couple on Saturday night when there was a knock at the door. When the homeowner opened the door he was confronted by the masked gang who forced him back into the dining room.

He suffered minor injuries as he was bundled back into the house and was hit with the gun.

The little girl began crying and the gang said they would hurt her unless the adults handed over the drugs.

Eventually the gang was persuaded that there were no drugs in the house, so they took everyone's cell phones and jewelry.

"The line we are taking is that this was an entirely innocent family and the gang have got the wrong house and thought it contained drugs," a police source told The Times. "It was absolutely terrifying for the family. They are traumatized and do not want any of their personal details released."

Police believe the handgun was fired accidentally.

"We are following several lines of enquiry, one of which is that the suspects may have targeted the wrong address," Detective Sergeant Simon Mitchell said.

Click here to read more on this story from the Times of London.