Italians and Americans were taken hostage in Iraq this afternoon, increasing the international tension about the upsurge in violence.

While Japan stood firm against a threat to kill three of its citizens if it didn't pull troops out of the country, insurgents said that they had seized four Italians and two Americans on the western outskirts of Baghdad.

A Reuters reporter confirmed seeing two Italians, one wounded, at a mosque defended by around 40 fighters with rocket-propelled grenades and assault rifles.

US soldiers near the village of al-Dhahab al-Abyad confirmed that some Americans had been taken hostage, but did not know how many. "That's why we are sealing off the road," one of them said.

Insurgents said that the Italians had been travelling in a four-wheel-drive vehicle with weapons in it. They said that they had captured the Americans in a separate attack.

In Tokyo, Junichiro Koizumi, the Prime Minister, said: "We cannot give in to the cowardly threats of terrorists."

But he added: "We don't know who this group is. Right now what we need to do is gather accurate information and bring them (the hostages) home safely."

Television broadcasters repeatedly screened dramatic video footage of Nahoko Takato, 34, an aid worker, Soichiro Koriyama, 32, a photojournalist, and 18-year-old humanitarian activist Noriaki Imai being threatened by their masked captors with knives.

The kidnappers said yesterday that the trio would be "burnt alive" if Japan did not meet its demand within three days.

Mr Koizumi called an emergency meeting of his Cabinet and created a task force to formulate a response. He also ordered a senior Foreign Ministry official to co-ordinate rescue efforts from Jordan.

According to the Yomiuri Shimbun newspaper Tokyo is to organise an airlift in a C130 transport aircraft to evacuate other Japanese civilians – including non-government organisation workers and journalists who want to leave - to neighbouring Kuwait.

The Prime Minister was expected to make a strong request for help from the United States when Dick Cheney, the US Vice President, visits this weekend.

Officials acknowledged, however, that they had few options. Yasuo Fukuda, the Cabinet's chief spokesman and head of the emergency task force, confirmed that the Government had "absolutely no contact" with the hostage-takers, a previously unknown group called the Mujahidin Squadrons.

Two Arab aid workers, one from Jerusalem and the other a Syrian-born Canadian citizen, were still being held today. Israel denied that they were spies and Yassir Arafat's Palestinian Authority said that it was stepping in to try to secure their release.

Mr Arafat had been approached by the family of Nabil Razzuq, 30, from Jerusalem, a PA official said. The organisation had therefore approached its office in Iraq to intervene.

Mr Razzuq, from Jerusalem, works for the US Agency for International Development (USAID).

A US-based refugee relief group said that the second Arab hostage, Yassin Tikati, 33, was one of its employees and had been managing a Unicef-funded programme. His real name was Fadi Fadel.

Fears were also growing for British civilian worker Gary Teeley, 37, who disappeared in the southern Iraqi city Nasiriyah on Monday.

Seven South Korean missionaries were held yesterday, but were released after they pretended to be doctors and nurses, the Foreign Ministry in Seoul said.

It added that it was pressing ahead with plans to send 3,600 troops to Iraq but imposed a strict ban on any other South Koreans traveling to the country.

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