The rear of the five-star Taj Mahal Palace & Tower Hotel on Mumbai's waterfront were on fire and the building was bathed in search lights as India's elite special forces painstakingly worked through the 565-room building freeing hostages and guests trapped in their rooms.

Explosions rocked the Taj and the Oberoi Hotel throughout the day but there were signs last night that police might be close to regaining control of the Taj and freeing the remaining 55 hostages there. Another 40 hostages were being held in the Oberoi as the number of people killed in the attacks rose to at least 119, according to police, with about 315 wounded.

Mr Singh, in a televised address to the nation, said the attacks were probably masterminded by a group based in a neighbouring country.