It felt like India's 9/11 | Co-ordinated attacks | Terrorist 'spectacular' expected | Islamist group suspected | City's history of violence | MEP fears | US promises united front |

The gunmen holding dozens of hostages in two of Bombay's luxury hotels are demanding the release of 'Mujahideens' held in Indian jails before they free their prisoners.

Speaking from inside the Oberoi hotel where at least half a dozen foreigners are being held hostage one of the gunmen, identifed as Sahadullah, told India TV he belonged to an Indian Islamist group seeking an end to the persecution of Indian Muslims.

"We want all Mujahideens held in India released and only after that we will release the people," he said. "There are seven of us inside Hotel Oberoi."

The demands came as the death toll in the terror attacks rose to 101, with six foreigners among the dead, according to police. Another 287 people have been injured, of whom at least seven are British, according to the British High Commissioner in India.

Estimates of the number of hostages held and people trapped in the Hotel Oberoi and Taj Mahal Hotel vary between 50 and 200.

Sir Richard Stagg, Britain’s High Commissioner to India, told the BBC: "We have visited most of the central hospitals where those injured have been taken and have met seven British victims who are in hospital at the moment and we understand there is likely to be some other injured of British nationality."

He refused to discuss the nature of their injuries and added that the nationality of the hostages being held in the city was unknown, although some were "foreign".

As dawn broke over the country's financial capital after the night of carnage, gunfire could still be heard in the country's financial capital.

Police with loudspeakers declared a curfew around the Taj Mahal Hotel, where at least two gunmen are still holding a number of hostages, many of them British and American.

Green uniformed soldiers were seen entering the Taj and the Oberoi. Ambulances were moved close to the Taj, in what might signal the start of a police assault on the building and its occupiers.

The attacks began late last night, when militants swept through the southern part of the city attacking a railway station, a backpacker hotel and the two hotels with automatic rifles and grenades. A taxi was bombed near the international airport.

At Leopold Café, a bar popular with tourists and backpackers, witnesses described pools of blood and bullet-scarred walls.

Eleven police officers, including the chief of Bombay’s anti-terror squad, were killed in stand-offs with gunmen. Police later said that they had killed four suspected terrorists and arrested nine.

A police spokesman said: “We have only a very tenuous grasp on what is happening so far. People are scared. The incidents being reported are so many. Gunmen are under siege at several locations but we are worried about hitting civilians.” Later, police said that they had killed four suspected terrorists.

The iconic Taj Mahal Hotel was set on fire, gutting the upper floors, and this mornng it was still ablaze. Soldiers and firefighters helped one woman and several others to climb down ladders and escape the blazing edifice as the firing continued inside.

A clutch of weeping Spanish, Italian and British guests huddled outside the hotel this morning, clutching bottles of water and haversacks.

A few miles away across town, eyewitnesses said gunmen hijacked a police van and then opened fire on crowds that had collected near two hospitals close to the police headquarters.

"We heard a car speed up behind us, it was a police van, but the men inside were firing at us," said Manish Tripathi, at a police cordon near one of the hospitals. "Men were screaming that they had lost their fingers. There was blood all over. I feel they are still screaming."

The ultra-orthodox Jewish outreach group, Chabad Lubavitch, was reportedly attacked overnight. Shots have been heard coming from the building and witnesses say a Jewish family is being held hostage, including a Rabbi. This has not been confirmed.

Schools and colleges have been ordered to close today, and the stock market will remain closed for at least the next 24 hours.

The Foreign Office phoneline for concerned relatives is 0207 008 0000.

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