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Prime Minister Atal Behari Vajpayee condemned what he described as a terrorist attack "on the entire nation" and pledged a "do or die battle" to finish off terrorism once and for all.

The gunmen's identity was not immediately clear, but Home Minister L.K. Advani spoke of leads that pointed to a "major conspiracy" aimed at destabilising the whole country.

The most direct attack on the heart of the Indian government since the 1984 assassination of prime minister Indira Gandhi began at around 11:40 am (0610 GMT), just minutes after both houses of Parliament had adjourned early for the day.

Vajpayee was not present, but senior ministers were in the house at the time along with more than 300 MPs. None of them was injured.

Officials and witnesses said the gunmen drove into the parliament complex through the outer perimeter in an official white Ambassador car -- displaying Parliament and home ministry security stickers and with its siren blaring.

They then jumped from the car and, armed with AK-47s, grenades and plastic explosives made for the main VIP entrance to the parliament building itself, firing as they went.

Parliamentary Affairs Minister Pramod Mahajan said all five gunmen, who were wearing commando-style outfits, were killed in the 40-minute shootout before they could enter the bi-cameral parliament.

One was blown apart after a belt of plastic explosive wrapped around his waist detonated.

Five police constables, one parliament security official and a member of the gardening staff were also killed and around 20 others injured in the exchange of fire.

Eyewitnesses said they saw six people in the gunmen's car and a senior police official said they were investigating reports that one of the attackers may have escaped.

During the shootout, MPs were corralled into the central hall by internal security staff who exchanged frantic messages over their walkie-talkies.

"Everyone is in the dark, please let us know what is happening," one security guard shouted into his radio.

The parliament compound was swiftly ringed by hundreds of heavily armed troops, police special forces and elite "Black Cat" commandos.

Bomb disposal experts later conducted a controlled detonation on the parliament lawn of a bomb left in a knapsack by one of the gunmen.

Thursday morning's attack "was not on the parliament, it was on the entire nation," Vajpayee said in a special televised broadcast.

"We have been fighting terrorism for the past two decades. The fight is in the last stages. It will be a do or die battle," he said.

"We accept the challenge. We will blunt every attack."

Home Minister Advani said the authorities were working on some leads which should allow them to unearth the conspiracy behind the operation "within some days."

"This is a major conspiracy," he said, adding that he had seen the faces of the five dead gunmen and "they did not seem to be Indian."

Pressed for more details, Advani cited the arrest a month ago of an alleged member of Osama bin Laden's al-Qaeda network in Bombay.

According to Bombay police, the man, Mohammad Abdul Afroz Razzak, had said under interrogation that suicide squads had been formed to carry out hits on the parliaments in London and New Delhi, and a tower block in Australia.

India won wide expressions of sympathy Thursday after gunmen stormed its parliament complex, with Pakistan expressing shock and Western countries denouncing the act as "terrorism."

The US embassy in New Delhi issued a brief statement condemning the attack as an "outrageous act of terrorism" and expressing "our deepest sympathy to the families of the victims of this attack".

Britain also condemned the attack as terrorism, in a statement by Foreign Secretary Jack Straw released by the high commission in New Delhi.

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