More than 30 hostages and 15 Islamist militants may have been killed in an air strike by the Algerian armed forces, with kidnappers warning more would die if the army attacked further, according to information given to local media by the militia.
Reports from Mauritania's ANI news agency, which has been in close contact with the kidnappers holding foreign workers hostage at the gas field deep in the Algerian desert, including several Britons.
But CNN have reported that the Algerian foreign ministry has denied bombing the area, only confirming that an operation is ongoing.
It has not been immediately possible to independently verify the information from the agency, which received it from a spokesman for the Masked Brigade, who insisted the deaths were a result of an Algerian government helicopter attack on a convoy holding kidnappers and hostages.
Reuters say seven foreign hostages are still alive, citing ANI news agency, who said those hostages were one Briton, three Belgians, two Americans and a Japanese
Sources told Al Jazeera that the deaths were a result of an Algerian government helicopter attack on a convoy holding kidnappers and hostages.
Reuters reported that vehicles belonging to the militants have been destroyed by the Algerian army.
David Cameron said he had been briefed on the situation by the Algerian Foreign Ministry in the last hour, and will chair a meeting of COBRA Thursday afternoon.
Local media has also reported that twenty-five foreign hostages, including two Japanese injured in air strikes, escaped from the siege of the plant, an Algerian security source told Reuters.
An Irishman caught up in the Algerian hostage crisis has been freed and is "safe and well".
The hostages were taken by a group, which claims it is linked to al-Qaeda, called the "Batallion of Blood", demanding France halt a military campaign against Islamist rebels in neighbouring Mali.
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.