Bomb blasts and flurries of machine-gun fire between heavily armed militants and Indian security forces stretched into a fourth day in Mumbai yesterday. Amid a hailstorm of bullets and bombs, and columns of thick black smoke, the last three assailants made a final desperate stand against hundreds of Indian police commandoes in black flak jackets at the Taj Mahal Palace and Tower Hotel.

"We have had bombs in Mumbai before and we have had terrorist attacks. But this has crossed a line," said V N Athawalla, a police commander posted in front of a government hospital handling many of the wounded.

The militants had appeared well-trained and well-organized as they quickly fanned out across the city late on Wednesday, laying siege to the symbols of modern India. They included two luxury hotels, the city's main railway station, a tourist café, two hospitals and a Jewish outreach centre.

Just hours into the siege, it became clear that well-trained and well-organised assailants had virtually shut down a city of 14 million people. The boldness and ferocity of the attacks stunned Mumbai, known as the Maximum City for its extremes of wealth and destitution, its never-ending boil of pedestrians, outdoor markets and noisy traffic.

By yesterday, the attackers had left a trail of devastation with nearly 200people killed and about 295 people injured. 22 foreigners - a Briton, two Americans and at least five Israelis - were known to have been killed in the chaos, widening the scope of the ordeal that many in Mumbai are calling India's 9/11.

Today, as police recovery teams carry on their room-by-room search for bodies at the two hotels in the centre of the mayhem, the death toll is expected to rise. Well into yesterday afternoon the air was filled with the boom of percussion grenades police commandoes used as they cleared out booby traps and any remaining gunmen hiding themselves the wreckage of the hotels.

As the attacks narrowed to the historic Taj hotel in the southern tip of Mumbai, the shock and grief of the terror attacks appeared to be giving way to outrage.

With the Deccan Mujahideen claiming responsibility, there is rising fear here that a backlash by Hindu hardliners could lead to communal violence in Mumbai, a restive city with a history of deadly riots between its Hindus and its minority Muslim population.

Indian officials now say that at least 15 gunmen carried out the operation. An Indian intelligence document from 2006 obtained by The Washington Post claimed members of a Pakistani terrorist cell, the Lashkar-i-Taiba, were being trained in maritime assault.

Even as Indian army troops and police commandos battled for control of the two hotels and the Jewish centre, massive crowds of bystanders began to gather, alternately cheering on the security forces and calling on India's government to get tough on terrorism.

"We should go to where they live and kill them in their own houses," shouted Ganesh Kargutkar, a 38-year-old auto parts salesman. "If we know who they are - and it is coming out they are from Pakistan - we should bomb them like they have done to us. No diplomacy, no more talking."

More than 550 hostages had been freed after two sleepless nights barricaded behind locked doors as gunmen roamed the hallways of the luxury hotels lobbing grenades and shooting indiscriminately into some of the rooms.

At the historic Taj hotel, white sheets tied together to make a rope dangled from some of the hotel's sixth floor windows near the top of the charred, bullet-pocked hotel, a symbol of utter desperation and horror experienced by the hostages as fires, sprays of bullets and bomb blasts shook the building.

Phillip Meyer, a French national here on a business trip for a cement company, was one of the hostages at the Trident Oberoi hotel, another luxury hotel where so far at least 30 bodies, mostly hostages, were recovered in the aftermath of the chaos.

"The problem was on the other side of the door. I heard bombs and shooting outside, but there was no way to know what was happening," he said before heading to the airport.

During much of the siege, sporadic gunfire and bomb blasts echoed through the narrow alleys in the neighborhoods at the southern tip of Mumbai, where many shops have been closed down since the attacks began.

Shrapnel and stray bullets had injured at least four bystanders - including two journalists - in front of the Taj.

By midnight on Friday, Indian special forces unit known as the "Black Cats" were in their final push to end a siege at the Nariman Building, where three gunmen had held at least five hostages, including a rabbi with dual Israeli-American citizenship and his wife at a Jewish outreach centre.

Earlier in the day, gunmen on the fourth floor of the Nariman building opened fire on nearby buildings as police sharpshooters tried to get into position. Police tried to cordon off much of the area to keep a crowd of more than a thousand bystanders out of the line of fire, a tricky feat after many onlookers weaved through the neighborhood's narrow alleys for a better view of the action.

On the first day of the siege, the gunmen sniper-fired into an apartment block across the street, killing at least one woman and two children, according to eyewitnesses.

The rescue of the hostages inside the Nariman building seemed to move in slow motion, drawing criticism from onlookers as well as eventual condemnation from Israel, who blasted India for botching the raid. The hostages were mainly Israelis and Americans of Jewish descent.

India's Hindu opposition nationalist Bharatiya Janata Party (BJP) has accused the ruling Congress party of being soft on terrorism, partly to court Muslim votes in next year's elections.

Narendra Modi, a rising star in the BJP and the controversial chief minister in the Indian state of Gujurat, blasted the government's lax security, and called on security forces to get tough on terrorists.

His comments struck fear in many of Mumbai's Muslims, who suspect Modi's involvement in the 2002 Gujarat riots in which more than 1,000 people, mainly Muslims, were killed by Hindu mobs.

Communal riots between Mumbai's Hindus and minority Muslim population broke out in Mumbai in 1992 and 1993, leaving more than 900 people dead.

"There are many Hindu people who are angry, and so I am fearful," said Muhammed Khan, a Muslim resident of Mumbai who has worked as a taxi driver for the past eight years.

As one of Mumbai's worst outbreaks of terror ends, details are starting to emerge about the attackers. On the streets of Mumbai, anger is building against Pakistan.

The Mumbai attacks are the sixth terrorist assaults in India this year alone, killing at least 144 people.

In 2006, bomb blasts ripped through Mumbai's railway station killing more than 180 people. After recent arrests, Indian officials suspect a militant group known as the Indian Mujahideen of orchestrating that attack.

Police and terror experts are investigating links between that terror cell and the Deccan Mujahideen, which claimed responsibility for the Mumbai assault.

Investigators are also looking into evidence that Pakistani militant groups, linked to Pakistan's intelligence service had trained the Mumbai gunmen.

Several gunmen had been staying at the posh hotel days before the attacks were carried out. Mumbai police found rucksacks of ammunition and grenades as well as several credit cards and at least £900 in cash.

"It is no longer between people, it is between governments. Pakistan was behind these bombings. They have sent terrorists here to kill us. What can we do?" said Suresh Solomon, 48, who worked as a driver at the Taj hotel for 12 years.

Standing across the street from the Taj, his eyes teared as firefighters scrambled to put out a fire that had broken out on the first floor of the hotel, sending thick black plumes of smoke in the air.

Much of the hotel appeared gutted by flames, leaving its windows shattered and charred black. On the bottom floor, high-end retail shops like Louis Vuitton and Bulgari had some of the windows shattered, the shiny leather handbags and suitcases still neatly arranged in their displays.

As the time of the assaults, Pakistan's foreign minister had been visiting India for peace talks. But relations between the two countries chilled almost instantly once details surfaced that Pakistan might be linked to the attacks.

Little is known about the Deccan Mujahideen, the group that has taken responsibility for the attacks. Some experts said they are linked to the Indian Mujahideen, an Islamist terror group that has claimed responsibility for several recent attacks against civilians in India.

Most of the terror attacks in India have included deadly blasts from bombs left in busy markets or railway stations. In the minds of many people in Mumbai, the latest assault was carried out by a squad of trained mercenaries, many of whom came by sea and joined up with others on their team to take over or destroy several of the city's landmarks where there were likely to be large concentrations of foreigners.

An Indian "Black Cat" special forces unit said the gunmen appeared to have a detailed knowledge of the layout of the hotels, giving them a tactical advantage over the Indian army troops and police commandoes sent in to dislodge them.

At the Taj and Oberoi, the gunmen demanded passports from hostages to single out British and American nationals.

Meanwhile, much of the city has yet to get back to normal. Many businesses and markets remained closed yesterday. The usual racket and bustle of cars and people had not returned, making an almost eerie silence for such a vibrant port city.

About 42 million Indians are employed in the country's tourism industry, much of it centered in Mumbai, seen as the financial and entertainment gateway into India.

Analysts are wary that the latest attacks could dampen the country's tourist sector, which brings in about 6% of the country's gross domestic product.

"We are a resilient city. We will bounce back. It might take a few days, maybe a month, but we will not let even this keep us from doing what we need to do to live," said Cyrus Cooper, 62, a retired stock trader.

His neighbourhood had been turned into a war zone strewn with the crumpled wreckage of cars and motorcycles destroyed in several grenade attacks.

Wandering through the mayhem near the Nariman were two Irish tourists who walked among the commandos and Indian army soldiers, snapping photos with their digital cameras.

They had finished eating at the Leopald Café near the Taj and had just returned to their hotel room when they heard a bomb blast on the street below.

"I wasn't sure what India would be like, but I really didn't expect this," said James Conaty, 26, who said Mumbai was the first leg of their tour around the world.

"This is not a good start," he added.