At least eleven militant Islamists have been killed in the desert gas field in Algeria when troops backed by helicopters attempted to free the hostages Thursday afternoon.

Algerian state media, quoted by BBC, said four hostages and several militants were killed. The militants had claimed to be holding 41 foreigners. At least four were freed but the fate of many others is unknown.

The news comes two days after dozens of foreigners and about 150 Algerian workers were taken hostage by heavily armed fighters near the In Amenas gas field.

The Islamist militants staged a deadly attack on a natural gas field near the eastern Algerian desert town of In Amenas Wednesday morning, killing two people. The attackers said the 41 foreigners included Americans, Japanese and Europeans - Norwegian, French and Irish citizens.

The hostage-takers demanded the release of Islamists from Algerian prisons and an end to French military action in Mali.

The kidnappers are believed to have been operating under orders from Mokhtar Belmokhtar, a  former senior commander of al-Qaeda in the Islamic Maghreb (AQIM), who now heads the Khaled Abu al-Abbas Brigade and the Signed-in-Blood Battalion.

Meanwhile, there have been contradicting reports about the hostage crisis with some news agencies reporting that it has ended and others, such as BBC, informing it has yet to be resolved.

On Friday morning, the UK Foreign Office has said it believed the incident was ongoing. The indications on Thursday night were that the military element of the operation had concluded, and that it had moved to the search phase.

According to BBC, there are now some unconfirmed reports that a small group of militants and hostages remain, possibly near the gas compressor at the main gas plant.

Algeria is yet to give precise casualty figures from the rescue attempt.

UK government sources informed they were trying to establish the fate of as many as 20 British people and were bracing themselves for multiple casualties.

Japanese officials were meanwhile cited as saying by the Kyodo news agency that at least 14 Japanese nationals were still missing. At least three managed to escape.

A source from Algerian security forces has claimed that two Algerians were among those killed in the Thursday raid, including the leader of the hostage-taker Tahar Bin Cheneb.

The same source has also said 30 hostages were killed, of whom the nationalities of 15 had been established. Of these, eight were Algerian and seven were foreigners, including two British, two Japanese and a French national.

The In Amenas gas field is operated by the Algerian state oil company, Sonatrach, along with the British oil company BP and Norway's Statoil.

It is situated at Tigantourine, about 40km (25 miles) south-west of the town of In Amenas and 1 300km (800 miles) south-east of Algiers.