One of the luxury hotels taken over by gunmen in Mumbai is back under the control of the authorities, India's elite commando chief says.
JK Dutt said commandos had killed two militants at the Oberoi-Trident hotel. Police found 24 bodies there, shortly after 93 guests and staff were freed.
Operations continue to rescue hostages at two other city sites, after a series of attacks that left at least 130 dead.
India's foreign minister said "elements with links to Pakistan" were involved.
However, his Pakistani counterpart has urged India not to bring politics into the issue, saying "we should join hands to defeat the enemy".
Gunmen armed with automatic weapons and grenades targeted at least seven sites in Mumbai late on Wednesday, opening fire indiscriminately on crowds at a major railway station, the two hotels, the Jewish centre, a hospital and a cafe frequented by foreigners.
Some 370 people have been injured, while the death toll is expected to rise as more bodies are discovered. One security official said eight foreigners were known to have died, among them three Germans, a Japanese, Canadian and Australian.
'Bodies in hall'
Mr Dutt, the director-general of India's National Security Guard, said the Oberoi-Trident was "under our control".
"We have killed two terrorists today," he said. "There was lots of firing, they also lobbed hand grenades. Some of them are unexploded, we are going to defuse them - you may hear some sound of explosions."
Security troops are battling at least one militant still in the hotel
Earlier, the army said at least one gunman with "two or more hostages" remained in the Taj Mahal Palace hotel.
Gunfire and explosions continue to be heard, after more than 100 commandos went into the hotel. A journalist and bystander outside the hotel were taken to hospital after being hit by shrapnel.
Indian commandos who managed to enter other parts of the Taj Mahal say they found at least 30 bodies in one hall.
The commandos also said the militants were well aware of the layout of the hotel, and that they had recovered a Mauritius identity card as well as guns and money.
The relief of the guests at the Oberoi-Trident was evident as 93 of them were escorted from the hotel on Friday morning following the lengthy siege. They included 20 Air France crew members.
One of those freed, Briton Mark Abell, spoke of his delight at seeing several heavily armed soldiers at his hotel door after spending more than 36 hours in his room.
But he was shocked by the state of the hotel. "The lobby was carnage, blood and guts everywhere. It was very upsetting," he told the BBC.
At first light, helicopters swooped over the Nariman House business and residential complex in south Mumbai, which houses the Jewish outreach group Chabad Lubavitch.
Commandos initially dropped smoke bombs to create confusion, and then several troops abseiled down ropes to secure the roof.
They are said to have been tentatively moving down through the building, trying not to cause casualties among the hostages.
Earlier, a woman and child were seen leaving the building, but it was unclear whether they had managed to escape or were released.
The child was identified as the two-year-old son of Rabbi Gavriel Noach Holzberg, the main representative at the ultra-orthodox outreach centre. There was no word on the rabbi's fate.