Fire tenders were rushed to the spot, officials said.
Earlier in the night, terrorists opened fire at police and paramilitary forces outside the Taj Hotel between 10.15 p.m. and 10.30 p.m., police officials said.
The officials, who refused to speak on record, said the terrorists fired indiscrimantely near the five-star hotel where around 2,000 guests and staff were stranded.
The body of a foreign woman guest was recovered from the Taj Hotel and two terrorists were holed up inside the building, a police official said.
At least 90 percent portion of the building was plunged into darkness as authorities cut off power in a precautionary measure.
3rd blast in 3 hrs at Nariman House, snipers take position
There's been a third explosion inside the Nariman House in Colaba, breaking the eerie silence for the third time in the last three hours.The building is still in darkness as the Army closes in. Snipers have taken position at Nariman House.
Earlier, seven terrorists were killed in commando operation at the Taj hotel. There are reports of fresh firing from inside the hotel. Army sources have told NDTV that operation at Taj can go on till morning.
However, the Director General NSG JK Dutt said that one injured terrorist was still inside the hotel.
The NSG chief said that it's a matter of time before the combing operation is over.
NSG commandoes have now launched their final assault at the Trident hotel where fire has been reported on the top floor.
Seven hostages have been rescued from Nariman House which is reportedly surrounded by NSG commandoes.
Earlier on Thursday, fresh blasts rocked Oberoi-Trident and Taj hotel. Security forces had launched a major counter-offensive against the militants holed up in various installations across the city.
Combined forces of National Security Guards (NSGs), Navy, Army, Mumbai Police and Anti-Terrorist Squad have been rushed to tackle an unknown number of militants hiding in various locations across the city.
Police said no more hostages were in Nariman House. However, the police added that two-three terrorists were suspected to be inside Nariman House.
All the security personnel, armed with sophisticated weapons and communication equipments were put in strategic locations in all the three sites and are coordinating with each other.
About 40 of them are also believed to be taken as hostages by the militants and are being shifted from one floor to the other frequently.
Militants have opened fire on the eighth floor of the Trident hotel in Mumbai, which is still under their siege. One terrorist has been caught alive from the Trident hotel by the commandos, reports say.
Around 10-12 terrorists are still holed up in the Trident hotel and have taken many hostage. Some of them are Israeli and Canadian nationals. Seven people have been rescued from the Trident, two have been brought out on stretchers.
More than 100 people have been killed so far, including nine foreigners and at least 327 injured in a series of well-coordinated terrorist attacks in Mumbai.
Terrorists, who apparently came in by boats, struck at 10 places in south Mumbai including five-star hotels, hospitals and train stations.
Speaking to NDTV, Maharashtra Director General of Police A N Roy said, "There is no indication so far of the identity of the terrorists."
He said that the terrorists were highly armed, level of weapons and training suggest that they are not locals.
According to sources, terrorists have demanded the release of prisoners, ransom. However, Ministry of Home Affairs has denied this saying that the terrorists did not make any demand.
Four Navy ships and choppers have launched search over Gujarat-Goa seas. Navy and Coast Guard are conducting joint search for the ship that may have carried the militants.
Credit cards with photos of militants have been seized by the Naval Commandos.
Naval commandos have seized grenades, AK 47 magazines, shells and knives from militants.
Earlier, NSG and Military Commandos entered the Taj and Trident hotels. Five terrorists have been killed. Several staff members at the hotels have also been killed, including two at Trident.
NSG Commandos launched operations in the Nariman House building in Colaba too. This was the second place that was attacked in Mumbai. Two men came on a scooter and hurled a grenade at nearby petrol pump.
Though the grenade missed the petrol reservoir, it destroyed a facade of the station. The terrorists then ran into Nariman House building behind petrol pump into a Jewish residential building. Here, the terrorists murdered two people and then went silent for several hours till early this morning. This is another place apart from the Taj and the Trident, which are under siege.
Policemen were able to successfully flush out terrorists from the Cama hospital and everything seems to be calm now. Curfew has been imposed at Colaba and Gateway of India. At least 800 Army personnel have been deployed at various locations in Mumbai.
At least 14 policemen have been killed across the city, including the head of the Maharashtra Anti-Terror Squad Hemant Karkare, who was shot three times.
Well-known encounter specialist Vijay Salaskar is also dead. Additional Commissioner of Police Sadanand Date is critical. Every top line anti-terror force in the country has been pushed into Mumbai including commandos of the National Security Guard, Marine Commandos and Army commandos.
There are also reports of low intensity blast in Ville Parle and grenade attack in Santa Cruz. Two blasts have been reported in Napean Sea road area of south Mumbai.
Many foreigners have been held hostage by the terrorists. "Gunmen took 15 hostages and half of them foreigners," said an eyewitness at Taj hotel.
"Gunmen wanted anyone with British or American passport," said another eyewitness.
Maharashtra Chief Minister Vilasrao Deshmukh said that around 20-25 terrorists entered Mumbai their nationalities are yet to be ascertained. Five terrorists have been killed so far, many escaped and one has been arrested.
An unknown organisation called the Deccan Mujahideen has taken the responsibility for the terror attacks.
Maharashtra government has announced Rs 5 lakh compensation for those killed and Rs 50,000 for those seriously injured in the attacks.
Speaking to NDTV, Maharashtra Deputy Chief Minister R R Patil said, "There is no plan for talks with the terrorists. Claiming to have some "vital leads", the minister expressed confidence of a breakthrough soon.
Prime Minister Manmohan Singh has addressed the nation and he also called an emergency Cabinet meeting. Home Minister Shivraj Patil is back in Delhi from Mumbai.
Cabinet Committee on Security met before the full Cabinet meet. The Prime Minister's election rally in Delhi scheduled for Thursday was also cancelled.
Intelligence sources say that foreign hand is fully evident in these attacks. They have arrested a Pakistan national from Chowpatty area in the city.
Police have seized a rubber boat, which anchored off Mumbai harbour. It all started with incidents of firing in Colaba and near CST station.
Meanwhile, train services have resumed at the CST station. Lufthansa, Northwest and Air France have cancelled their flights.
On their part, hotels in Mumbai have been asked not to take new guests.
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