A series of loud explosions and heavy gunfire has been heard at Nairobi's Westgate shopping mall as dense black smoke billows from the complex.
The area around the mall was teeming with Kenyan soldiers and armoured personnel carriers on Monday, as emergency workers and reporters were told to take cover.
Ambulances were also seen accelerating towards the scene.
The mall has been under siege by al-Qaeda-linked Somali gunmen since Saturday in an attack that has killed at least 69 people, including a young Australian architect and his pregnant partner.
Another 63 have been reported missing.
Tasmanian-born Ross Langdon and his wife Elif Yavuz were expecting their first child in weeks when gunned down by the Islamist attackers.
The director of an architectural firm with offices in Melbourne and London, Mr Langdon spent much of his time working on projects in East Africa, including pro bono efforts for an HIV-Aids hospital and launching a "rusty roof exchange" program improve domestic housing.
The Kenyan army says it has secured most of the upmarket, part Israeli-owned complex, while a security source said a final assault was underway against the al-Shabaab rebels, believed to be pinned down in a part of the mall but using hostages as human shields.
"Our concern is to rescue all hostages alive and that is why the operation is delicate," the Kenya Defence Forces said, adding that it was trying to bring a "speedy conclusion" to the drama.
It did not say how many people were being held by the dozen-or-so attackers, who marched into the sprawling four-storey complex, spraying shoppers with machine gun fire and tossing grenades.
Al-Shabaab spokesman Ali Mohamud Rage warned the hostages would "bear the brunt of any force directed against the mujahedeen".
In an address to the nation on Sunday, Kenyan President Uhuru Kenyatta vowed the attackers would "not get away with their despicable and beastly acts".
"We will punish the masterminds swiftly, and indeed very painfully," he vowed, revealing that a family member - a nephew and his fiancee - were among the dead.
A Kenyan security source and a Western intelligence official said Israeli forces were involved in the operation, along with British and US agents.
Police sources who had entered the building on Sunday evening said they feared the death toll, now confirmed at 68, "could be much, much higher ... judging from the bodies sighted inside".
The rebels said the carnage was in retaliation for Kenya's military intervention in Somalia, where African Union troops are battling the Islamists.
The International Criminal Court on Monday excused Kenyan Vice President William Ruto from his crimes against humanity trial for a week so he can deal with the Nairobi militant attack.
The UK's Foreign Office is investigating suggestions a female British terror suspect nicknamed the `White Widow' could have been linked to the terror attack.
Witness accounts have suggested a woman was among the attackers, fuelling speculation Samantha Lewthwaite, who was married to London bomber Jermaine Lindsay, is involved.
She is wanted by Kenyan police over links to a suspected terrorist cell planning bomb attacks.
