Commandos are still fighting room to room battles with terrorists inside two luxury hotels in Mumbai, India.
Officials said the Taj Mahal hotel was nearly clear of gunmen while fighting continued at the Oberoi-Trident hotel.
Seven hostages have been freed at a another stand-off, at a Jewish centre.
Gunmen targeted at least seven sites in Mumbai on Wednesday night.
A security official said one gunman remained in the Taj Mahal hotel and that the military was in control of the situation.
Commandos are continuing to sweep of the Oberoi-Trident, where a number of guests are trapped in their rooms or are being held hostage.
Gunmen targeted at least seven sites in Mumbai on Wednesday night, killing at least 125 people and wounding 300.
Police say four gunmen have also been killed and nine arrested.
Prime minister Manmohan Singh blames groups based in neighbouring countries for the coordinated attacks.
In a televised address, he said the government "will take whatever measures are necessary to ensure the safety and security of our citizens".
Mr Singh described the attacks as "well-planned and well-orchestrated... intended to create a sense of panic by choosing high profile targets and indiscriminately killing foreigners".
Earlier reports from the hotels said the attackers were singling out British and American passport holders.
A claim of responsibility has been made by a previously unknown group calling itself the Deccan Mujahideen.
Lucky escape for NZ consul
The Taj Mahal Palace is one of the world's leading hotels and is regularly used by visiting dignitaries and wealthy guests.
The Honorary Consul for New Zealand in Mumbai, Pradip Madhavji, had attended a dinner party at the hotel and left about 9.30pm, just before gunmen armed with automatic weapons and grenades stormed the lobby.
Mr Madhavj says he learned of the attacks on television when he arrived home and could not believe his lucky escape.
Foreign Affairs Minister Murray McCully says there have been no reports of injuries to any of the 47 New Zealanders known to be in Mumbai. He condemned the attacks as cowardly.
New Zealanders have been advised against all tourist and non-essential travel to the city.
Meanwhile, the family of a New Zealand couple holed up in the Oberoi hotel say they are safe and well. David and Vinka Clemmett had been on holiday in Mumbai before being caught up in the attacks.
Mr Clemmett's sister, Christine Lawrence, says the couple are in good spirits but obviously concerned about the situation. She says Mr Clemmetts told her they are not being threatened by the attackers.
A series of attacks in Mumbai on 11 July 2006 killed almost 190 people and wounded more than 700. Bombs were detonated on commuter trains during rush hour.
There were two previous bomb attacks in Mumbai in 2003. A bomb on a commuter train killed 11 people on 13 March, and two car bombs killed about 60 people on 25 August that year.
A series of blasts in markets in the capital of India, New Delhi, on 13 September this year left more than 20 dead.