Casualty numbers were not complete, but more than 100 bodies were reportedly found in the gymnasium where hostages had been held. The head of the crisis center later confirmed at least 60 bodies had been identified, but the number was expected to rise as fighting continued in the school complex.
The regional head of the FSB security service, Valery Andreyev, also told reporters that at least 400 hostages had been freed in the military operation. Local hospital authorities reported about 400 injured, half children, and many in critical condition. Militants had already freed about 26 hostages, all women and children.
Since the militants seized the school Wednesday morning, reporters and Russian military have flooded Beslan, a town of 30,000 in North Ossetia, near border of the breakaway republic of Chechnya.
North Ossetia's president, Alexander Dzasokhov, said the militants had demanded independence for Chechnya.
The final bloody siege began after militants reportedly agreed to let Russia retrieve the bodies of people killed early in the initial raid. As the emergency personnel approached the school, explosions went off and hostages took the noise as a signal to flee, officials said.
Militants opened fire on the fleeing hostages and security forces returned fire.
"I want to point out that no military action was planned. We were planning further talks," Andreyev was quoted as saying by Interfax news agency.
"Local people who were armed also then opened fire on the bandits. This did not allow the special forces to do their work effectively," he said.
Televised images showed partially dressed children who had fled the school eagerly drinking water upon reaching safety. The school was reportedly sweltering and the captors had refused offers of food and water.
"They are very cruel people, we are facing a ruthless enemy," said Leonid Roshal, a pediatrician involved in the negotiations.
"I talked with them many times on my cell phone, but every time I ask to give food, water and medicine to the hostages they refuse my request."
The identity of the hostages takers was not immediately established. Lev Dzugayev, a North Ossetian official, told the Associate Press that the attackers might be from Chechnya or Ingushetia. Andreyev told CNN and other reporters that 20 of the hostage takers had been killed in fighting and that at least nine of them appeared to be foreigners from "Arabic" countries.
About a dozen militants escaped with the flood of hostages, according to the Interfax new agency. Gunfire was heard in the town as authorities tried to hunt down the militants. There were also reports that some of the hostage takers were holed-up in the basement of the school.
The school seizure was one of several recent militant attacks against Russia. On Tuesday, a suspected Chechen suicide bomber blew herself up outside a Moscow subway station, killing nine people, and last week 90 people died when two planes crashed due to explosions linked to suspected Chechen bombers.