An Algerian government spokesman confirms hostages have died in a military operation in the Sahara desert as David Cameron warns of 'further bad news' for the UK.

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Reuters reported the first official comments from the Algerian government spokesman, Communication Minister Mohamed Said, who said that some hostages were killed in the military operation at a desert gas plant on Thursday but that troops had been forced to act to free them after talks with their captors failed.

It is feared two Japanese nationals, two Britons and a French national were among at least seven foreigners killed. Eight of the dead hostages are thought to be Algerian. The nationalities of the rest, as well as dozens more believed to have escaped, are not yet clear.

Later it was added that the Algerian state news agency was quoting an unnamed official source who said that military operations had now ended.

'Further bad news'

In the absence of confirmed information, David Cameron told reporters that the country should be "prepared for the possibility of further bad news". The prime minister, who chaired three meetings of the Cobra security committee on Thursday, also announced that he has postponed his long-awaited speech on Europe in order to stay in the country to deal with the crisis.

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Foreign Secretary William Hague is to return early from a trip to Australia.

Irishman escapes unharmed

The escape of an Irish national was confirmed when the Irish department of foreign affairs said that an Irish hostage had been in touch with his family to say that he had been freed and was safe. Stephen McFaul, from west Belfast rang his wife Angela at around 3pm, his sister Donna McBride confirmed. Ms McBride said "We are absolutely delighted that he is free and is unharmed."

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She added "I feel so sorry for the rest of the families who have lost loved ones and others who are missing." A second man from Belfast is believed to be caught up in the crisis, but his situation remains unknown.

Earlier Scottish First Minister Alex Salmond told MSPs that a number of Scots were also caught up in the incident.

Speaking in Washington, US Secretary of State Hillary Clinton said "the security of our Americans who are held hostage is our highest priority," adding "because of the fluidity and the fact that there is a lot of planning going on, I cannot give you any further details".

No advance warning

A Downing St spokesman confirmed that Mr Cameron was only told of that the Algerian military operation was already underway when he spoke to the Algerian Prime Minister Abdelmalek Sellal at 11am on Thursday.

The spokesman said that although Mr Cameron made it clear he would have preferred to know of the action in advance, "the Algerian prime minister explained that the situation was very fast-moving and that in the government's judgement they needed to act immediately".

Earlier, Mr Cameron had been in contact with his Norwegian and Japanese counterparts, and had agreed that it was best to work through the Algerian government rather than take unilateral action.

"Our focus is on working through the Algerian government and the company," the No.10 spokesman said, adding that the situation was "very serious and dangerous". He said that the prime minister was ready to consider any requests for assistance, but that the Algerian government "understandably, very much sees itself as in the lead in its sovereign territory."

As conflicting reports emerged, Japan's Prime Minister Shinzo Abe protested against the raid and the threat to the hostages' lives, according to his spokesman.

A day of confusion

Earlier the Arabic news station al-Arabiya quoted Algerian army and government sources, saying the military operation was over and that 34 hostages and 15 kidnappers were dead but that 45 hostages had escaped, among them 15 foreigners.

It was also reported that some 600 people were released during the military operation. Jihadi militants had seized the BP gas facility deep in the Sahara desert early on Wednesday.

The reports from the Algerian authorities seemed to at least in part confirm earlier claims by the militants that 35 of the hostages, who include British, American and European nationals, and 15 kidnappers were killed after Algerian helicopters began strafing the In Amenas plant near Algeria's border with Libya.

In a day of conflicting reports, Algerian Ennahar television said earlier that 15 foreigners, including two French citizens, had escaped the besieged plant deep in the Sahara desert. It also said that about 40 Algerians had also been freed, mainly women working as translators. Other reports said as many as 20 foreign nationals had escaped.

The In Amenas facility is jointly operated by BP, Statoil and Algerian company Sonatrach.

Heavily armed Islamic militants said they had repelled an attempt by Algeria's army on Thursday morning to enter the gas facility where they claimed to be holding up to 41 foreigners.

However, Mauritania's ANI news agency reported that one of the kidnappers had said the Algerian government was using helicopters to bomb the facility. A spokesman for the captors told ANI: "We will kill all the hostages if the Algerian army tries to free them by force." He was reported to have said that Algerian forces had "started shooting in our direction and to change position, presumably in an attempt to free the hostages."

Earlier, one hostage, identified as a Briton, was quoted calling for negotiations to "spare any loss of life". He said: "We are receiving care and good treatment from the kidnappers. The (Algerian) army did not withdraw and they are firing at the camp."

Another hostage said they were being forced to wear explosive belts and the heavily armed gunmen were threatening to blow up the base if the Algerian army stormed it.

Motive

A Briton and an Algerian were killed when the kidnappers occupied the plant on Wednesday. Algerian officials dispute the kidnappers claims to hold 41 hostages, and say 20 foreigners are being held, including British, Japanese, French, Norwegian and US nationals. On Thursday morning Scotland's First Minister Alex Salmond told MSPs that a number of Scots were among the hostages.

On Wednesday night the gunmen exchanged fire with Algerian soldiers, who were forced to retreat. Two British nationals were injured in the attack, as well as two police officers, a security guard and a Norweigan.

One of the leaders of the Jihadi insurgent group which claims responsibility for the attack claims that the raid was "in response to, and in revenge for" Algeria's decision to open its airspace to French fighter aircraft en route to Mali.

VIDEO: Watch Jonathan Miller's report on the Algerian raid

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Foreign Secretary William Hague accused the militants of "cold-blooded murder" and dismissed their claims that the kidnapping was related to France's operation in Mali.

"This is an absolute tragedy of course. In this dangerous and rapidly developing situation the next of kin have been informed," he told the BBC.

"Excuses being used by terrorists and murderers who are involved - there is no excuse for such behaviour, whatever excuse they may claim.

"It is absolutely unacceptable of course. It is in this case the cold-blooded murder of people going about their business. So there is no excuse whether it be connected to Libya, Mali or anywhere else."

The Mauritanian online news agency "Sahara Medias" claims to have spoken to one of the battalion's spokesman by telephone, following the abductions in Algeria. The fighters, who are also known as "The Masked Men" reportedly defected from al Qaeda in the Islamic Maghbreb two months ago and say they are affiliated to one of the three Islamist insurgent groups operating in northern Mali.