National Security Guard commandos take position Thursday near a building housing a Jewish prayer hall which has been taken over by gunmen in Mumbai. (Saurabh Das/Associated Press)

Seven foreign hostages were released from Mumbai's besieged Trident-Oberoi Hotel on Friday morning, some carrying luggage bearing Canadian flags.

The group was whisked away in cars as police and military officials continued their efforts to liberate one of two luxury hotels besieged during a string of attacks in Mumbai that killed at least 119 people and left close to 300 injured.

Authorities worked throughout Thursday to scour the 333-room hotel, searching for hostages still being held inside by an unknown number of armed gunmen. State officials had estimated that 35 people were being held captive in the hotel.

A Canadian government sources had earlier said six Canadians were unaccounted for following the attacks, but officials couldn't confirm whether they were being held hostage or simply had yet to be found.

"The safety of the people trapped is very important," said A.N. Roy, a senior police officer. "It will take time, but it will be completed successfully."

Meanwhile, Indian forces have launched an offensive on a Jewish centre in Mumbai, where gunmen are also believed to be holding several hostages.

Snipers in buildings opposite the office of the ultra-orthodox Jewish group Chabad Lubavitch began shooting around dawn Friday as a helicopter circled overhead. In the streets below, six trucks of soldiers surrounded the building.

A Reuters witness said security forces fired into the building, apparently to provide cover as several commandos rappelled down a rope from the helicopter onto the roof of a Jewish centre.

Indian officials said early Thursday that eight hostages had been freed from the centre, but later in the day, a diplomat said the eight had been hiding in a nearby building and that no one inside the Jewish centre had been freed.

Other reports suggested that two workers and a child wearing blood-soaked clothes escaped from the building Thursday morning. The child, who was unharmed, was identified as Moshe Holtzberg, 2, the son of Rabbi Gavriel Noach Holtzberg, the main representative at Chabad house.

Confusion reigned Thursday, a day after attackers armed with rifles and grenades attacked in the sprawling city of about 13 million people. The gunmen struck a total of 10 sites, including a packed train station, a restaurant popular with tourists, the Jewish community centre, hospitals and two luxury hotels.

By late Thursday, military officials said all hostages had been freed from the 565-room Taj Mahal Palace & Tower. More than 400 people were brought out of the hotel. Officials said at least three attackers were killed.

However, army commanders said early Friday they believed there were still two or three more militants in the Taj and about 15 civilians.

"We need to get them out of the rooms they have locked themselves into," said Brig. Bobby Mathews.

Turn off lights, guests told

The liberation of the Taj Mahal hotel came after a fierce battle.

Indian forces garbed in black rushed the hotel early Thursday, the sound of gunshots reverberating through the area. Gunfire and explosions could be heard from inside the building. Flames were also spotted coming out of a fourth-storey window.

Indian security forces moved from room to room in the hotel, looking for gunmen and booby traps. In the afternoon, bodies and hostages were taken out of the building.

"There’s been a series of thunderous explosions that have gone off at the hotel since this morning at irregular intervals," freelance reporter Anuj Chopra told CBC News.

An unidentified man who had been trapped inside the Taj Mahal hotel told India's NDTV that hotel staff told them on Wednesday to turn off any lights in their rooms, draw the curtains and not answer the locked door if they heard any knocks.

Soldiers in Oberoi hotel

M.L. Kumawat, special secretary for internal security at the Indian Home Ministry, said that the 21st to the eighth floors in the Oberoi hotel had been cleared by security agencies. Police were later seen escorting several people out of the hotel.

A self-proclaimed gunman earlier told India TV that seven attackers were holding hostages inside the Oberoi.

"We want all mujahedeens held in India released, and only after that, we will release the people," a man identified as Sahadullah told India TV.

"Release all the mujahedeens, and Muslims living in India should not be troubled."

Train station, restaurant targeted

Sharda Janardhan Chitikar, left, is consoled by a relative as she grieves the death of her two children and waits for their bodies outside St. George's Hospital in Mumbai on Thursday. (Gurinder Osan/Associated Press)

A Muslim organization calling itself Deccan Mujahedeen has claimed responsibility for the attacks.

Six foreigners were killed, including at least one Australian, a Japanese and a British national, said Pradeep Indulkar, a senior government official of Maharashtra state, whose capital is Mumbai. A German and an Italian were also killed, according to the foreign ministries in the two countries.

Fourteen police officers, including the chief of the anti-terror squad, were also killed.

Most of the dead were Indian nationals — many of whom died in the attack on Chhatrapati Shivaji Terminus train station as gunmen fired indiscriminately on waiting passengers.

One witness, who watched as four young men dressed in black T-shirts and jeans and carrying rifles began shooting into the crowd at the station, trembled as he recounted the scene Thursday morning.

"They just fired randomly at people and then ran away. In seconds, people fell to the ground," Nasim Inam said between sobs, noting the attackers looked no older than 25.

"They were so young. They were young boys," said Inam. "I was standing behind. I was just behind. If they had turned around, it would have been me."

Hospitals targeted

In similar attacks several kilometres away, gunmen disguised in police uniforms and driving a hijacked police van opened fire on crowds gathered around two hospitals.

"We felt the ground shake and heard the explosions," said Manish Tripathi, who escaped that attack unhurt.

Police officers inspect a car after they shot dead two suspects in Mumbai late Wednesday night. (Associated Press)"We heard a car speed up behind us. It was a police van, but the men inside were firing at us."

As the gunmen unleashed a hail of bullets into the crowd, "men were screaming that they had lost their fingers. There was blood all over," he said.

"Some were shot in the leg, some on the shoulder or hand. I feel they are still screaming."

In a television address, Indian Prime Minister Manmohan Singh condemned the attacks.

"The well-planned and well-orchestrated attacks, probably with external linkages, were intended to create a sense of panic, by choosing high-profile targets and indiscriminately killing foreigners."

Officials in neighbouring Pakistan also condemned the attacks.

"Prime Minister Yousaf Raza Gilani, while strongly condemning the incidents of violence in Mumbai, has expressed deep sorrow over the loss of precious lives," the Pakistani government said in a statement.

India has previously accused elements in Pakistan of supporting Islamist militants battling Indian forces in the disputed Kashmir region, and of complicity in bomb attacks elsewhere in India.

Mumbai, a financial hub on the west coast of India that used to be called Bombay, has been repeatedly targeted by attacks blamed on Muslim militants and underworld figures since 1993.

The most recent attacks prior to Wednesday occurred in July 2006, when a series of co-ordinated bomb blasts on commuter trains during the city's morning rush hour killed nearly 190 people and injured more than 700.

With files from the Associated Press and Reuters