Parents maintaining an agonising vigil outside the Russian school seized by a suicide squad were becoming increasingly desperate last night.

In a surprise move, the terrorists released 31 women and children yesterday afternoon.

But at least 300 people were still inside the school in Beslan, not far from war-ravaged Chechnya.

The release came only moments after the suspected Chechen rebels unleashed a salvo of rocket-propelled grenades at two cars that got too close to the school in North Ossetia.

Women cradling very small children emerged from the building and were whisked away in cars by 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.

Authorities have ruled out using force at this stage to end the siege. Russian President Vladimir Putin pledged to do everything possible to save lives and his officials said an assault on the school would be the last resort.

Lev Dzugayev, an aide to the president of North Ossetia, said his earlier statement that 354 hostage were seized might have been too low, and many in the anxious crowds outside the school said they believed the number was much higher.

President George Bush rang President Putin and offered US assistance to end the siege - an offer not yet taken up.

The attackers holding the school - said to number about 24 and including women - are heavily armed and are wearing suicide belts. They have threatened to kill 50 children for every one one of them killed by Russian forces.

The hostage-takers' exact demands are unclear, but they are said to be calling for the withdrawal of Russian troops from Chechnya and the release of Chechen rebels held in Ingushetia.

Meanwhile, weeping and weary, pacing and shaking their heads again and again, thousands waited for news of the children and their teachers.

Some curled up on benches to fall into fitful sleep. Others leaned in exhaustion against their spouses.

" The poor children, the poor, poor children," a woman sobbed as others around her talked in hushed tones.

" They're telling us nothing. I'm not hearing anything. It's frightening. It's awful," said Svetlana Tsakayeva, whose adult daughter and three grandchildren, aged ten, six and six months, were taken hostage.

One man said it was clear to him that the hostage-taking was connected to the other terror acts that have shaken the country in the past week: two airliners downed, apparently by explosives, killing 90, a suicide bombing in Moscow that killed nine and wounded scores.

" Of course, they're linked. It's all connected. They know exactly what's going on in Moscow and they're not telling us," said the man, who refused to give his name.

Armed guards in ponchos roamed through the crowds outside near an armoured personnel carrier.

People milled about the streets, stepping through mud and puddles from an evening downpour, greeting each other dismally.

Inside Beslan's House of Culture, dozens sat in the auditorium with coats draped over them as blankets. One woman whispered a silent prayer, crossed herself three times and bowed her head. Men anxiously smoked cigarettes.

Fatima Berezova, a doctor at one of the local medical clinics, came because she has many relatives who have children taken hostage.

" What kind of a reaction can a person have? It's horrible," she said.

" How can one person do this to another person, never mind to children?"