The release of 32 hostages came well into the second day of the crisis, after blasts and gunfire were heard.

Officials ruled out using force to end the siege in North Ossetia, and Russian President Vladimir Putin said the hostages' safety was paramount.

Hundreds of desperate parents are waiting outside the school in Beslan.

Women cradling very small children emerged from the building and were whisked away in cars by Russian security forces, as the crowd rushed forward to find out who had been freed.

Officials said the breakthrough came after mediation efforts by the former president of the neighbouring region of Ingushetia and that negotiations would continue.

As the siege continued, anger and frustration was growing among the families.

Some of the hostages have reportedly been able to phone home, describing conditions in the school as tolerable.

Inside are pupils, teachers and parents who had come to the school on Wednesday morning to help celebrate the first day of term.

"Our main task is to save the life and health of those who have ended up as hostages," said President Putin who cancelled a working holiday and visit to Turkey to deal with the crisis.

The head of the Russian security service in North Ossetia has said there is "no question" of opting for force at the moment.

"There will be a lengthy and tense process of negotiation," Valery Andreyev was quoted as saying by Reuters news agency.

North Ossetia's Interior Minister Kazbek Dzantiyev said 12 civilians had been killed since the siege began, Itar-Tass reports.

The hostage-takers began talking overnight to prominent paediatrician Lev Roshal, who helped negotiate the release of children during the siege of a Moscow theatre in 2002.

Roshal said they refused offers to deliver food and water, but he was assured the children were fine.

Masked men and women, wearing bomb belts, burst into the school, whose pupils are aged seven to 18, at around 0930 local time (0530 GMT) on Wednesday.

Trip wires are believed to have been laid around the school, with the attackers threatening to blow it up if stormed by police.

Dzantiyev was quoted as saying on Wednesday they threatened to kill 50 children for every fighter killed.

The hostage-takers are reported to have demanded the withdrawal of Russian troops from Chechnya and the release of Chechen rebels held in Ingushetia.

The Russian authorities are blaming what they call international terrorism, with suspicion falling on Chechen separatists, who have been fighting for independence from Moscow for the past decade.

Chechen rebel leader Aslan Maskhadov has denied that his forces are involved in the siege.

The school crisis came a day after a suspected suicide bombing in Moscow killed 10 people. Last week, the mid-air explosions of two passenger planes left 89 dead.

Earlier the United Nations and governments were united in a chorus of condemnation of the hostage-taking that has shocked the world.

The UN Security Council issued a tough condemnation late Wednesday and demanded the immediate release of the 350 people, including 132 children, held by extremists wearing belts laden with explosives.

"The Security Council condemns in the strongest terms the heinous act of taking hostages at a secondary school in the town of Beslan," said the Council's president for September, Spanish ambassador Juan Antonio Yanez-Barnuevo, in a presidential statement.

"The Security Council demands the immediate and unconditional release of all hostages of the terrorist attack," it said.

The statement, adopted by all 15 Council members after lengthy discussions, did not link the hostage-takers to any group.

A spokesman for the French foreign ministry, Cecile Pozzo di Borgo, yesterday "strongly condemned" the hostage-taking, saying "no cause could justify" it.

"We demand the immediate and unconditional release of these hostages."

Portuguese President Jorge Sampaio condemned the hostage-taking as a "barbarous act" in a message sent to his Russian counterpart Vladimir Putin.

"The terrorist attacks which the Russian Federation have been the target off, which culminated with the barbarous taking of hostages at a school in Beslan, in North Ossetia, cause the strongest indignation and deserve an energetic condemnation," he wrote.

German Foreign Minister Joschka Fischer said: "No argument can justify taking children hostage and threatening to kill them," he said. "Our thoughts are with the hostages and their families and we hope that this hostage crisis will end quickly and without bloodshed."

Turkey, which has in the past been accused by the Russian authorities of turning a blind eye to the alleged presence on Turkish soil of Chechen rebels and of failing to prevent its citizens from joining the secessionists' ranks, dubbed the hostage-taking an "unacceptable act of terrorism", after Putin postponed a planned trip to the country.

"We forcefully condemn this form of terrorist action, which can in no way be justified and which harms the life of innocent people and even children," said a written statement issued by the foreign ministry.

"This is an unacceptable act," it said, adding that terrorism was the "biggest threat against peace and security" in the world. (REUTERS/ AFP)