Algerian special forces have launched a rescue operation at a natural gas plant in the Sahara Desert and freed foreign hostages held by al Qaida-linked militants, but the number of dead was unclear.
One Algerian security source said 30 hostages were killed, including two Britons, two Japanese, and one French national. At least 11 militants, including one Frenchman, were also said to have been killed.
But Algerian state television said that four captives - two Britons and two Filipinos - had died. The militants claimed at least 35 hostages died in the state's rescue attempt, but there was no way to independently verify the toll in the remote location, 800 miles from Algiers.
The militants, claiming revenge for France's intervention against rebels in Mali, seized the In Amenas natural gas complex on Wednesday, taking dozens of foreign workers hostage.
The reports of high casualties have deeply disturbed foreign governments, prompting a number to criticise Algeria's operation. Britain's Foreign Office attempted to prepare the British public by saying: "We should be under no illusion that there will be some bad and distressing news to follow from this terrorist attack." Prime Minister David Cameron said the country should be "prepared for the possibility of further bad news".
The Algerian government said it was forced to intervene due to the militants' stubbornness and their desire to escape with the hostages. Algerian communications minister Mohand Said Oubelaid said: "An important number of hostages were freed and an important number of terrorists were eliminated, and we regret the few dead and wounded."
He added that the "terrorists are multinational", coming from several different countries with the goal of "destabilising Algeria, embroiling it in the Mali conflict and damaging its natural gas infrastructure".
Islamists from the Masked Brigade, a Mali-based al Qaida offshoot, who have been speaking through a Mauritanian news outlet, said Algerian helicopters opened fire as they tried to leave the vast energy complex with their hostages. They claimed that 35 hostages and 15 militants died in the attack and only seven hostages survived.
One Irish hostage was confirmed safe - supervising electrician Stephen McFaul, whose mother said he would not be returning to Algeria. His mother Marie said: "He phoned me at 9 o'clock to say al Qaida were holding him, kidnapped, and to contact the Irish Government, for they wanted publicity. Nightmare, so it was. Never want to do it again. He'll not be back. He'll take a job here in Belfast like the rest of us."
In Washington, White House press secretary Jay Carney said the Obama administration was "concerned about reports of loss of life and are seeking clarity from the government of Algeria".