A group of up to 20 foreign nationals, including a French couple and some Americans, have escaped from their kidnappers, according to unconfirmed local reports.
Two Algerian army helicopters have also apparently attacked the gas complex, injuring two of the Japanese hostages, according to Mauritania's ANI news agency.
One hostage, identified as a Briton, told Al Jazeera: "We are receiving care and good treatment from the kidnappers. The (Algerian) army did not withdraw and they are firing at the camp."
He urged negotiation to "spare any loss of life".
The Algerian state news agency APS reported 30 Algerian workers also managed to flee from the In Amenas gas field mainly women working as translators.
An Algerian security source told Reuters that the gunmen, who stormed the gas facility on Wednesday, were demanding safe passage out with their captives.
Meanwhile David Cameron’s official spokesperson said the UK would consider any requests for assistance made by the Algerians - but none had yet been made. “If they had any requests we would consider them,” the spokesperson said.
Downing Street also believes the “nature and extent” of the attack in which one Briton has already died suggests an element of “pre-planning” on the part of the militants.
Scotland's First Minister Alex Salmond has confirmed that Scottish nationals are believed to be among the hostages, addressing MSPs on Thursday.
Salmond told MSPs at Holyrood: "I should tell the chamber that I spoke with the Prime Minister this morning about the hostage-taking situation in Algeria.
"As the chamber will know a terrorist group has seized the BP Statoil facility in the Algerian Sahara.
"Citizens of a number of nationalities are involved, including UK citizens.
"I can confirm to the chamber a number of Scots are among the hostages.
"The UK Government reports that one UK national has been killed in the attack. I know the chamber will understand in the interests of the safety and security of the hostages, the information that can be given out is necessarily limited.
"The priority is their safety and of course to keep the families informed. The Scottish police service is fully engaged with the Metropolitan Police on the latter and Scottish Government ministers are in contact with the Foreign and Commonwealth offices on the former.
"This is a hugely serious situation and I know that the whole chamber is united, both in condemnation of the attack, and also in hoping for the early and safe release of the hostages."
Reuters reported France's Defence Minister Jean-Yves Le Drian as saying he has "total confidence" in the Algerian government to resolve the standoff.
French President François Hollande has said that the situation at the BP gas plant “remains confusing” and refused to confirm if French nationals were among the hostages.
Western hostages have been forced to wear belts strapped with explosives, France 24 reported, quoting one of the hostages.
The French channel said a man had called them to say the hostage-takers were heavily armed and were prepared to blow up the natural gas field if rescue was attempted.
He declined to be identified but told France 24 that there were British, Japanese, Philippine and Malaysian nationals taken hostage.
“They came in and once there was daylight, grouped us all together.”
The channel could not verify the call, and said it did not know if the man was speaking under duress.
British special forces are reportedly on standby and Hague said the Government is working "around the clock" to resolve the Algerian hostage crisis, where 41 foreign nationals are believed to have been taken hostage.
A number of Britons are among the group being held after armed Islamist militants stormed a natural gas field in the eastern part of the North African country.
The militant group Katibat Moulathamine - "The Masked Ones" - contacted a news agency in the Saharan state of Mauritania to claim the raid was carried out by an affiliate group, identified as "Those who sign their names in blood".
A spokesman for the Katibat told the Sahara Media Agency that 41 Westerners of nine or 10 nationalities had been taken hostage, including seven Americans.
Five foreigners were being held in a factory while 36 others were in living quarters at the plant, claimed the spokesman, who said the action was carried out in retaliation for Algeria allowing France to use its air space to carry out raids on northern Mali.
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