Several Britons have been taken hostage - and one UK national killed - in a terrorist attack at a gas field in Algeria, according to Sky sources.
An Islamist militant group has claimed to have kidnapped up to 41 foreign nationals - including seven Americans and an Irishman - in a dawn raid on the gas facility part-operated by BP, Algerian state oil company Sonatrach, and Norway's Statoil in Algeria.
It claims to have repelled an attempt by Algerian soldiers to enter the facility, forcing them to retreat after an exchange of gunfire.
The group is said to be demanding French President Francois Hollande halts the operation against Islamist rebels in Mali.
It has also been reported that the group wants the release of 100 Islamists held in Algeria, in exchange for those being held at the gas field.
Three people have reportedly been killed in the attack at the plant situated in the east of the country near the Libyan border.
It follows a failed attempt earlier in the day when three vehicles carrying heavily armed men tried to ambush a bus carrying employees from the plant to a nearby airport.
The Algerian Interior Ministry said: "After their failed attempt, the terrorist group headed to the complex's living quarters and took a number of workers with foreign nationalities hostage.
"The forces of the People's National Army and security services arrived at the scene and immediately took all necessary measures to make the area secure and seek a rapid resolution of the situation, which is being very closely followed by the national authorities."
Algeria said it was not negotiating with the hostages.
Prime Minister David Cameron chaired a 45-minute meeting of the Government's crisis committee Cobra on the attack, attended by ministers from the Foreign Office and Ministry of Defence, as well as officials from other agencies.
His official spokesman said afterwards: "The ongoing incident has involved various nationalities, including several British nationals.
"We are working with BP to support the families of staff and provide consular assistance."
Mr Cameron has also spoken to Algerian Prime Minister Abdelmalek Sellal, with both agreeing to keep in touch as the situation progresses.
Foreign Secretary William Hague described it as "an extremely dangerous situation".
He told Sky News: "We are liaising very closely at all levels with the Algerian government. I've just spoken to our ambassador in Algeria and sent a rapid deployment team from the Foreign Office in order to reinforce our embassy and consular staff there."
Downing Street said that it was "too early to speculate" on the motive.
BP is yet to comment on reports that Islamist militants, said to be connected to al Qaeda, had carried out the attack in revenge for the French military action in Mali.
The company said in a statement that the site was "attacked and occupied by a group of unidentified armed people," at around 5am UK time and that some personnel were believed to be "held by the occupiers".
It said it was seeking information as to whether any staff or contractors had been injured - and the identities and intentions of the people occupying the site - adding that it was contacting relatives of workers on the site.
A Japanese company, JGC Corp, provides services for the facility as well.
In addition, French company CIS catering has said that 150 of its Algerian employees are also being held at the site.
The White House said it was "closely monitoring" the situation, while French President Francois Hollande said he was in "permanent contact" with the Algerian authorities.
Ireland's Department of Foreign Affairs (DPA) confirmed a 36-year-old married man from Northern Ireland, travelling on an Irish passport, was among those taken.
It is understood that Japanese, Norwegian and French nationals, and a Canadian, are also part of the group.
Ireland's Deputy Prime Minister Eamon Gilmore called for the Irishman's immediate release.
He said: "The Government stands ready to use all the resources available to us to ensure that our citizen is released as soon as possible."
The country's Department of Foreign Affairs added it was providing consular assistance to the family and was in close contact with its international partners and a wide range of other contacts in order to establish the facts of the situation.
Militant group Katibat Moulathamine - "The Masked Ones - led by Algerian national and former al Qaeda leader Mokhtar Belmokhtar, has reportedly claimed that one of its affiliates is responsible for the attack, and that five foreign nationals are being held in a factory on site, and 36 others in their living quarters.
The spokesman is said to have claimed the attack was carried out in retaliation for Algeria allowing France to use its airspace to carry out raids on northern Mali.
The development comes as EU foreign ministers are preparing to meet in Brussels on Thursday to discuss plans to send a 400-strong military training mission to Mali.
Europe Minister David Lidington said that Britain could make a "small contribution" to the mission but stressed that it would not be involved in combat operations.