By Nick Paton Walsh

Beslan, North Ossetia. Sept. 3. (Guardian news service):THE RUSSIAN president, Vladimir Putin, moved yesterday to calm escalating tension in the hostage crisis in the North Ossetian town of Beslan as sporadic gunfire and explosions threatened to rupture delicate negotiations with Chechen gunmen.

Mr Putin said his key priority was to save the lives of the 323 children, parents and teachers held hostage in the town's main school.

Yet his pledge and the release of 31 women and children yesterdayafternoon did little to reassure the crowds of anguished relatives millingaround the barriers. Russian soldiers closed off some roads on one side ofthe school at 8pm, stoking fears that Moscow was anxious to see an end tothe second large-scale hostage crisis to be inflicted by militants in twoyears.

The mood among the large crowds of relatives hardened. Many believedthat Moscow was covering up the true number of hostages inside the school.``It's all disinformation,'' said Oleg, whose sister and daughter arehostages. ``They say 354 hostages, but it's over 500 or 700.''

Mr Putin, eager not to ignite tensions among the crowd or in thehalf-million strong republic in which they live, said: ``Our main task is,of course, to save the life and health of those who became hostages. Weunderstand these acts are not only against private citizens of Russia butagainst Russia as a whole.

``What is happening in North Ossetia is horrible.It's horrible not onlybecause some of the hostages are children but because this action canexplode even a fragile balance of interconfessional and interethnicrelations in the region.'' North Ossetia is a Christian Orthodox republicin a region largely dominated by Islam.

Among the thousand-strong crowd around the Palace of Culture that sitsat the end of the barricades around the school, the animosity towards thepeople of Chechnya was palpable. Elderly women muttered in disgust, whileEdik, 11, was blunter. ``We need to shoot and punish them,'' he said.

The crowd gasped in relief when officials announced the release of 31hostages. It provided a momentary respite in a negotiation process that hasthus far failed to provide the Kremlin with a badly-needed exit from thestandoff. It was secured by the intervention of Ruslan Aushev, anAfghanistan war hero and former president of the neighbouring Muslimrepublic of Ingushetia.

At 1.18am yesterday, Leonid Roshal, a paediatrician who had negotiatedwith hostage-takers in the Moscow theatre siege two years ago, made contactwith the gunmen at their request. His offer of a safe exit was refused, NTVreported. He said he was not able to establish what the hostage-takers'demands were.

Dawn brought an official admission by the spokesman for the NorthOssetian president that seven had died as the militants entered thebuilding. This report was later contradicted by the Associated Press, whocited an anonymous official saying 16 had died, 12 of whom were hostages.

Speculation over the exact number of hostages held continued to grow.One North Ossetian official was heckled when he tried to tell the crowd atotal of 354 people were being held. Most members of the crowd believedthe figure was twice as high. One woman who was released from the schoolyesterday, Alina Kudzayeva, told a friend the true figure was 1,020.

At 1pm, authorities insisted again that the possibility of an operationto storm the school was ``out of the question, for the time being''. Thehead of the North Ossetian branch of the Russian security services, theFSB, Valeri Andreev, said: ``We are continuing lengthy and intensivenegotiations.''

Up to six telephone calls between the crisis headquarters and the gunmenwere made yesterday, a source close to the negotiating team told theGuardian. A man calling himself Ali answered the phone in the school, thesource said.

A series of explosions and gunshots, whose origins and target wereindeterminable, punctuated the day. Relatives shrieked and gasped when ablast sounded across the area at 3pm. Militants had reportedly fired arocket-propelled grenade at a rescuer's Lada car, thought to have driventoo close to the school. A dull, repetitive thud, similar to artilleryfire, could be heard in the distance at 6pm. An exchange of automaticgunfire rang out at 7pm.

Several accounts last night suggested the women and children had beenseparated from the male hostages, who had been moved from the sports hallto the second floor of the neighbouring main school building. The gunmencontinued to refuse offers of food and water for the hostages.

The deteriorating conditions inside the school raised fears that thePutin administration, renown for its strongman image, might be seeking aswift if bloody exit. The attack is the fourth by suicide bombers againstRussian civilian targets in eight days.

Russia's bid to secure UN condemnation of the attacks on Wednesdayheightened fears it was shoring up international opinion for a brutal endto the standoff. The White House said yesterday it had offered Russiaunspecified ``assistance'' in dealing with the crisis, but that none hadbeen requested thus far.

The identity of the gunmen could not be confirmed yesterday, despitemedia reports that the militant leader Doka Umarov was behind the attack. Aspokesman for Aslan Maskhadov, the separatist militant leader, denied thathis followers were involved in the incident on a website.

The dilemma ahead for the Kremlin was summed up by one relative, NugarGusoyev, 40, whose wife, a childhood sweetheart, is inside the school withher sister and niece. ``Of course Russia cannot pull out of Chechnya. Butwe have to have a peaceful solution. If they storm they will kill everyone- 100% of them.''