GUNFIRE intensified as night fell in the Chechen capital Grozny tonight where Russian troops mounted ``search and destroy'' missions against rebel fighters who attacked and occupied parts of the city.

The sky over the war-torn city glowed orange with what local people said was a blaze at an oil dump south of the city. Officials said it would take several more days to remove the rebels.

Sniper and automatic gunfire and more powerful blasts echoed across the city centre, some 500yd from the Moscow-backed government's headquarters.

After three days of battles with fighters loyal to separatist leader Dzhokhar Dudayev, Russian armoured vehicles, including at least one T-72 tank, stood guard near the building as soldiers tried to flush out the rebels.

``The situation is extremely tense,'' said a Chechen Interior Ministry commander.

Russian television, in the first footage broadcast from the area since Wednesday's rebel attack, quoted the Interior Ministry as saying: ``The situation is totally under control.''

However, Ruslan Zakayev, secretary of the pro-Moscow Chechen government's security council, said: ``The situation in Grozny is difficult . . . Part of the city has been seized and is controlled by Dudayev's fighters.''

Rebels, whose numbers were difficult to estimate, had taken areas in the south-east, west, and north-west of the city.

``The government's response will be of the toughest order. Strong measures will be taken to push out and liquidate the fighters,'' he said.

Asked how long this operation would take, he said: ``For this we need several days.''

Tass reported heavy fighting between the ruins of the presidential palace and Minutka Square. It later said Russian forces had driven rebels out of Minutka.

However it said Russian troops were struggling to relieve a command post in the Zavodskoi region of south-west Grozny, which was coming under fire from surrounding rebels.

``The situation is continually changing,'' said Ruslan Martagov, spokesman for the Chechen government.

He described the federal troops as frightened and overstressed, and said some had fired on local policemen.

However General Nikolai Tkachev, Russian military chief-of-staff in Chechnya, told Interfax that the situation was stabilising, though tense in southern areas as rebels sought to escape.

Russian forces, including elite paratroops, have suffered some of their heaviest casualties of the 15-month Chechen conflict since rebels launched their bold raid on Grozny.

About 70 Russian Interior Ministry troops had been killed and 160 wounded in the fighting, while about 40 servicemen were missing. There were no details of civilian or rebel casualties. -Reuter.