Islamist militants who have killed at least 62 people in a Nairobi shopping centre are reported to be "running and hiding" in stores as security forces close in.
Two of the "terrorists" have been killed and several others injured after the military launched a major assault, said Kenya's interior minister Joseph Ole Lenku.
He added there was "no way out" for the other fighters and "no room for escape" in the three-day-long siege.
And he claimed security forces were in control of all floors of the four-storey building following Saturday's raid by gunmen from Somali militant group al Shabaab - linked to al Qaeda.
Aerial view of the smoke rising from the shopping centreSky's chief correspondent Stuart Ramsay, reporting from the scene, said a source told him around six or seven gunmen were still fighting the military in the shopping mall.
Mr Lenku said most hostages had been freed, without giving specific numbers.
Four British nationals were among the dead, including Ross Langdon, who had dual Australian nationality.
The 33-year-old architect died alongside his Dutch wife Eliv Yavus who was pregnant and due to give birth in two weeks.
Colleagues of Mr Langdon told Sky News: "We were shocked at the news. Ross was the kind of guy who restored your faith in humanity - what a senseless waste."
Mr Langdon and Eliv Yavus. Pic: Windgrove: Life on the Edge blogEarlier in the day, four huge explosions were heard followed by a barrage of gunfire at the Westgate shopping complex in the Kenyan capital.
Black smoke poured from the top of the building as troops lay siege to the mall while military and police helicopters circled above. Hours later, as night fell, the smoke was still billowing.
A security official told reporters at the scene: "It is us who caused the explosion, we are trying to get in through the roof."
However, Kenyan minister Mr Lenku said the smoke had been caused by the al Shabaab fighters setting fire to mattresses as a decoy.
Kenyan troops take cover as they await developmentsHe said he expected security forces to end the siege soon and two of the attackers had been killed.
"We think the operation will come to an end soon," he told a news conference. "We are in control of all the floors, the terrorists are running and hiding in some stores ... there is no room for escape."
Kenya's police chief David Kimaiyo admitted some hostages had still not been rescued, but insisted: "We're increasingly gaining advantage of the attackers."
Defence chief General Julius Karangi said the militants were "a multinational collection from all over the world".
Sky's Stuart Ramsay reporting on the siegeThe Kenyan Defence Force said earlier on its Twitter feed it was making every effort to bring the situation "to a speedy conclusion".
It said it had secured most of the shopping mall, and many of the hostages had been rescued.
Officials said the attackers have been using the hostages as human shields and have threatened to kill them.
Al Shabaab spokesman Ali Mohamud Rage warned the hostages would "bear the brunt of any force directed against the mujahedeen".
Troops make their way to the shopping mallThe group said the shopping mall attack was in retaliation for Kenyan military action in Somalia that is helping to support the Mogadishu government.
The atrocity is the worst in Nairobi since an al Qaeda bomb attack on the US embassy in 1998 that killed more than 200 people.
The Kenyan Red Cross has set up a webpage for anyone worried about friends or relatives who might be caught up in the siege.
:: A helpline has been set up for people in the UK who are concerned about relatives in Kenya: 020 7008 000.
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