Indian special forces fired grenades through the windows of a luxury Bombay hotel tonight against one or more Islamist gunmen determined to fight to the death.

Some 48 hours after launching co-ordinated attacks on the country's commercial capital rumours persisted that at least one of the terrorists involved in Wednesday's attacks was a Briton of Pakistani origin.

The Foreign Office said that Indian authorities had confirmed that there was "no evidence that anyone, either of those shot or those in custody, was British".

Today, at the Jewish cultural centre where a group of militants had been holed-up, there were premature celebrations when a group of commandos walked out with their rifles in the air after ending their siege of the building. It soon emerged that the five hostages held inside the centre had all been killed during the course of a day-long assault.

The Brooklyn-based Chabad-Lubavitch organisation confirmed that among the dead was Rabbi Gavriel Holtzberg and his wife Rivka, who ran the ultra-Orthodox group's outreach centre in Bombay. The couple's two-year-old son, Moshe, was smuggled out of the building last night and is now with his grandparents.

An Israeli rescue service which had sent a mission to help with the siege at the Chavad Lubavitch centre said that it thought all the hostages had been killed. "Apparently the hostages did not remain alive," the Zaka service said in a brief statement. The mission of the Zaka volunteers is to rescue the living or gather up all collectable pieces of flesh and blood so that the dead can be properly buried.

The Israelis' deaths brought the total number of foreigners known to have killed to 18, including three Germans, two Americans and two French nationals. One Japanese, a Canadian, an Australian, an Italian and a Singaporean also died and at least five other Israelis are missing.

The only known Briton confirmed dead was Andreas Liveras, a 73-year-old yachting tycoon shot dead in the Taj Mahal Palace hotel on Wednesday night.

The Chief Minister of Maharashtra state, Vilasrao Deshmukh, was quoted as saying today that two British-born Pakistanis were among eight gunmen arrested by Indian authorities.

Both Gordon Brown and David Miliband, the Foreign Secretary, played down the claim, although said they could not rule it out. The Foreign Office said tonight that Indian officials were now denying that Mr Desmukh had ever made the remark.

Indian special forces, meanwhile, gave their first account of the mission to liberate the Taj, one of two luxury hotels seized by the terrorists. They described a sequence of running battles with gunmen in corridors and rooms strewn with dead bodies and seriously injured guests.

The battles were continuing into the night tonight - official reports on the number of militants left in the landmark hotel varied between one and six. At one stage troops fired grenades through a hotel window, targeting a room where the terrorists were holding out.

But officials claimed success in ending a siege of the luxury Oberoi hotel, where as many as 30 people had been held hostage. Commandos killed two gunmen as they seized control of the tower today.

"The hotel is under our control," Mr Dutt said. He said that 24 bodies had been recovered from the hotel, pushing the confirmed death toll from the coordinated attacks up to 148.

In New Delhi, a Government minister explicitly pointed the finger at Pakistan for the first time. "Preliminary evidence, prima facie evidence, indicates elements with links to Pakistan are involved," Pranab Mukherjee, the Foreign Minister, told a press conference.

The Pakistani Foreign Minister, Shah Mehmood Qureshi, responded with a call to India not to play politics with the Bombay attacks. "Do not bring politics into this issue. This is a collective issue. We are facing a common enemy and we should join hands to defeat the enemy," he said during a visit to the Indian town of Ajmer, which hosts an important Islamic shrine.

Nevertheless, Islamabad agreed to an Indian request to send the head of its military intelligence service, the ISI, to India to share information on the attacks.

The investigation into the al-Qaeda-style terror attacks is focusing on a fishing vessel that was found off the city's coast with a dead body aboard. It is thought that the vessel was used by the terrorists before they climbed aboard a smaller boat to land at Colaba, the tourist area in southern Bombay where the gunmen's targets are clustered.

The nationality of the dead man found on the boat is unknown, but one theory being pushed by many inside India's intelligence apparatus is that the boat's origin was Karachi, in Pakistan.

The gunmen were well trained and well prepared, apparently scouting targets ahead of time and carrying large bags of almonds and dried fruit to keep up their energy.

"It’s obvious they were trained somewhere... Not everyone can handle the AK series of weapons or throw grenades like that," a senior office of India’s Marine Commando unit told reporters, his face wrapped in a black mask to protect his identity, told reporters today.

"These terrorists were very well informed regarding the layout of the hotel. In no time they vanished and were gone elsewhere. The kept moving around the hotel," the officer said.

Bags belonging to the terrorists contained hundreds of rounds of ammunition and grenades were recovered. A Mauritian national ID card, apparently that of one of the gunmen, was also found, together with seven credit cards and more than $1,000 in cash.

The officer said that the Taj had been filled with terrified civilians, making it very difficult for the commandos to fire on the gunmen. "To try and avoid civilian casualties we had to be so much more careful," he said. "Bodies were strewn all over the place and there was blood everywhere."

The commando added: "They were the kind of people with no remorse - anybody and whomsoever came in front of them they fired.

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