NIA, a Mauritanian news agency, quoting a spokesman for the kidnappers, reports that 35 hostages and 15 assailants have been killed, after an Algerian army attack on the In Amenas gas field where an undetermined number of hostages were being held captive by islamists.
The NIA says the leader of the hostage-takers, Abu al-Baraa, was killed during the offensive and that the army attacked the kidnappers' vehicles as they attempted to transport hostages.
Four hostages were rescued alive, according to the agency, and some still remain in captivity.
Among those still held, are thought to be American, Belgian, Japanese and British citizens.
The source said Westerners were among the dead, but did not elaborate.
There is no independent confirmation of the reports, but both the British and French governments said on Thursday afternoon that an an operation was underway at the In Amenas gas plant.
Earlier, NIA had quoted a member of the group which seized the hostages as saying Algerian helicopter gunships had opened fire on the complex.
On Thursday, 15 foreigner and 30 Algerian hostages managed to escape, Algerian media reported, citing officials.