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Updated at 1450 GMT (2020 Bombay)

The Indian Navy boarded and searched a cargo ship off the coast of Bombay today as the Prime Minister blamed forces "outside the country" for coordinated terror attacks on India's financial capital.

A Navy spokesman said that the MV Alpha had recently arrived in Bombay from the Pakistani city of Karachi, although Manmohan Singh was careful not to point the finger directly as he made a televised appeal for calm and unity after last night's atrocity.

More than 100 people were killed when gunmen slipped into the city by boat last night before fanning out and hitting a number of targets including a backpacker bar and two five-star hotels popular with Western visitors and the Bombay elite. Six foreigners were killed and the Foreign Office confirmed this afternoon that one of them was British.

Loud blasts rocked southern Bombay this afternoon as commandos moved to rescue the final hostages in the five-star Oberoi-Trident hotel and a nearby Jewish centre. Blasts were also heard at the Taj Mahal Palace hotel, even though the city's police chief had earlier announced that all terrorists had been cleared from the burning building.

The terrorists were said to have arrived in two small boats near the Gateway of India, a landmark monument built in 1911 to mark a visit by George V and Queen Mary. They split up to attack various targets including hospitals and a railway station where they fired indiscriminately at passengers. They were armed with AK47 assault rifles, hand grenades and explosives.

The attacks were claimed by a previously unknown group, the Deccan Mujahedeen, which demanded the release of all Mujahideen, or Islamic holy warriors, in Indian jails. The co-ordinated attacks bore the hallmarks of al-Qaeda, but there was no sign of any formal link with the terror network.

One militant inside the Oberoi/Trident, identifying himself only as Sahadullah, told an Indian television station by telephone: "Release all the mujahideens, and Muslims living in India should not be troubled."

The Press Trust of India today quoted an "authoritative source" that the gunmen were Pakistani nationals, but witnesses described said them as young Indians speaking either Hindi or Urdu.

The Prime Minister said that the terrorists had "external linkages". "It is evident that the group which carried out these attacks, based outside the country, had come with single-minded determination to create havoc in the commercial capital of the country," he said.

But Pakistan's leaders strongly condemned the attacks and the militant group Lashkar-e-Taiba, which is often accused of fomenting unrest in India, deniedy any involvement.

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