Four huge explosions have been heard followed by a barrage of gunfire at the Westgate shopping complex in Nairobi where 69 people, including four Britons, have died in a raid by Islamic militants.
Black smoke is pouring from the centre as Kenyan troops lay siege to the four-storey complex while military and police helicopters circle above.
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, a Kenyan minister said the smoke had been caused by the al Shabaab militants setting fire to mattresses as a decoy.
Sky's Stuart Ramsay said he had been told some of the terrorists had blown themselves up while others has been "taken out" by special forces.
He added: "Things have heated up a lot. This appears to be the op trying to get to those hostages but it's going to be very difficult and very dangerous."
Aerial view of the smoke rising from the shopping centre
Interior Minister Joseph Ole Lenku said he expected security forces to end the siege soon. Two of the attackers had been killed in the assault and several injured, and there was no way out for the others.
"We think the operation will come to an end soon," he told a press 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."
One of the Britons killed in the raid, which began on Saturday, has been named as Ross Langdon, who had dual Australian nationality.
Mr Langdon and Eliv Yavus. Pic: Windgrove: Life on the Edge blog
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."
The 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 up to 15 attackers were still been inside the building. They have been using the hostages as human shields and have threatened to kill them.
Kenyan troops take cover as they await developments
Al Shabaab spokesman Ali Mohamud Rage warned the hostages would "bear the brunt of any force directed against the mujahedeen".
Kenya's President Uhuru Kenyatta said there have been "numerous offers of assistance from friendly countries" to end the stand-off, but that for now it remains a Kenyan operation.
However, a Kenyan security source confirmed that Israeli agents were "rescuing the hostages and the injured". The Westgate shopping complex is part Israeli-owned.
Britain's SAS is also reportedly helping out in an advisory role, along with US agents.
The Kenyan Red Cross says 69 people have been killed, at least 63 remain missing and around 200 have been injured. Five of these are said to be from the US.
Troops make their way to the shopping mall
Police have conceded the number of dead could be "much, much higher", after reports emerged that there are multiple fatalities still inside the centre.
The Foreign Office, which confirmed four Britons were among those killed, warned that number was likely to rise.
Also killed were two Canadians, two French citizens, two Indian citizens, a South Korean, a South African, a Dutch woman and the former UN envoy Kofi Awoonor.
Prime Minister David Cameron is cutting short a visit to Balmoral to chair a meeting of the emergency response committee Cobra in London later today. Defence Secretary Philip Hammond chaired a Cobra meeting this morning.
Mr Cameron has described the attack on the shopping complex as "despicable" and an act of "appalling brutality".
Samantha Lewthwaite: Is she involved?
Meanwhile, some reports are linking a female British terror suspect nicknamed the "White Widow" to the plot, although the Foreign Office has denied it is investigating these claims and the Kenyan authorities say all the attackers are male.
Samantha Lewthwaite, who was married to July 7 bomber Jermaine Lindsay, is wanted by Kenyan police over links to a suspected terrorist cell
In March 2012 it was reported that Lewthwaite, 29, who is originally from Aylesbury, Buckinghamshire, had fled across the border from Kenya to Somalia.
Ramsay said: "We know that she'd been in the area. She has been linked to a number of attack in east Africa and they have been trying to capture her.
"Interestingly she has been used in the past with planning and propaganda, not actual assaults, although there is some evidence she has been linked to at least one.
Sky's Stuart Ramsay reporting on the siege
"It is difficult to know whether or not it is her. The government have said there have been reports of more than one woman involved.
"Al Shabaab is thought to consist of foreign nationals as well as people from Somalia. I've heard reports of one Briton being involved and someone from Canada as well."
Mr Kenyatta said one of his nephews and his nephew's fiancee were among the people confirmed killed.
"They shall not get away with their despicable and beastly acts," the president said in an emotional speech to the nation. "We will punish the masterminds swiftly and indeed very painfully."
The attack is the worst in Nairobi since an al Qaeda bomb attack on the US embassy in 1998 that killed more than 200 people.
Judges at the International Criminal Court have adjourned the trial of Kenyan vice president William Ruto for a week to allow him to return home and help deal with the crisis.
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.