Pakistani security forces are intensifying their operations outside the Red Mosque in Islamabad where radical clerics are refusing to surrender to government forces.
Pakistani media report president Pervez Musharraf Saturday warned the mosque's leaders to either free hundreds of women and children still inside or be killed.
Heavy fire and powerful explosions rocked the Lal Masjid, or Red Mosque, early Saturday morning.
Every few hours now the government troops fire on the mosque as authorities increase the pressure on the militant forces still inside.
More than a thousand people have surrendered since Tuesday when violent clashes erupted outside the mosque, leaving at least 19 people dead.
Officials say up to a thousand others remain inside, including hundreds of women and children. State minister of Information Tariq Azim says around 50 to 60 hardcore and well-armed militants have taken over.
"It is now almost certainly a hostage situation. We are told by a boy who came out this morning that there were 30 - 40 in a room and they are being guarded by armed guards and anyone trying to escape is shot at."
Azim says supplies inside the mosque are reported to be running low and the situation is becoming increasingly desperate.
Family members of those inside gathered near the mosque in an effort to obtain information about their trapped relatives. At least one man was injured Friday after gunmen opened fire on a group of parents trying to free their children.
One of the Mosque's top clerics, Abdul Rashid Ghazi, says he and his supporters would rather die than surrender. Azim says the government still hopes to avoid a potentially bloody raid into the mosque itself.
"Our strategy is to tire them out, not fire them out."
Azim also rejected Ghazi's demand for safe passage out of Islamabad in exchange for an end to the standoff.
Ghazi and his supporters, who want to impose Taleban-style religious law in the capital, have repeatedly challenged the government's authority in recent months.
Students from the mosque's religious school led a series of raids into the city, at one point kidnapping several policemen and alleged prostitutes.
The mosque is increasingly seen as a major political embarrassment for Pakistan President Pervez Musharraf.
Government critics accuse President Musharraf of failing to confront religious extremists despite his self-described platform of "enlightened moderation."
President Musharraf escaped injury Friday after unknown gunmen targeted his plane as it took off from a military airbase outside the capital.
Security forces say they have recovered three weapons, including two anti-aircraft machine guns, from a residence in the area where they believe the gunfire came from.