A Russian negotiator said a group of Chechen separatist rebels would start killing hostages later tonight if their demands were not met and leading officials did not start talking to the group.
Another four hostages among some 700 people held by the Moscow theatre have been released, all citizens of Azerbaijan, an official in the Russian crisis response unit said tonight.
Earlier, Mr Sergei Govorukhin, a film-maker who had been involved in the talks with the Chechens alongside various other officials, said the talks were getting harder and it seemed the difficulties encountered seemed almost unresolvable.
"The situation is becoming difficult, almost a stalemate, almost unsolvable. If representatives of the authorities do not go in, I cannot exclude - according to our information - that at 10 o'clock (local time) the terrorists will start shooting the hostages," he told Russian NTV television.
The rebels had threatened to start executing the hostages tomorrow if their demands are not met, according to reports.
The hostage-takers said they had now given the Russian authorities three days following the beginning of the hostage-taking late on Wednesday to pull out troops from Chechnya. They initially set a deadline of a week.
Russian authorities shut down a regional television channel and the website of independent radio station Moscow Echo for broadcasting an interview with the hostage-takers.
Negotiators, among them a leading anti-war reporter, Ms Anna Politkovskaya, were still in talks with the rebel commandos. They had specifically asked her to intervene.
The head of Russia's FSB intelligence service, Mr Nikolai Patrushev, said the Kremlin had offered to spare the lives of the hostage-takers if they released their captives.
Earlier, the rebels released 15 hostages, including eight children, but detained 700 others in the booby-trapped theatre amid growing public pressure on President Mr Vladimir Putin to end the Chechen war.
As the media condemned the Russian authorities for failing to prevent the commando from striking within five kilometres from the Kremlin, one of the hostages said the hall in which they were being held contained a large bomb that could be exploded at the first sign of any attempted assault.
Seven hostages were freed earlier this morning by the rebels - about 50 men and women - who are demanding an end to the three-year war in Chechnya, Federal Security Service (FSB) spokesman Mr Sergei Ignachenko said.
Red Cross officials were allowed to bring out eight children from the building, but FSB officials said at least 20 were inside.
The rebels also failed to stick to an earlier agreement to release 75 non-Russian hostages, who with the others now face a third day surviving on little more than chocolate and water.
A doctor allowed into the theatre said the hostages were in reasonable health and were not being physically ill-treated, but were under great stress.
Pressure is growing too on Mr Putin, whose uncompromising stand on Chechnya helped propel him to the presidency in March 2000.
Russian forces have been battling since October 1999 to restore Moscow's control over breakaway Chechnya after an initial war in 1994-1996 by rebels seeking autonomy.
AFP