The stand-off between Pakistani troops and militant clerics and students of Lal Masjid escalated on Wednesday as they exchanged heavy fire while over 800 students surrendered amid reports that security forces may storm the complex.

The authorities extended the deadline periodically for students to surrender as hardcore elements with suspected links to militant group Jaish-e- Mohammad continued to remain defiant and exchanged automatic weapons fire, a day after clashes left 21 dead and 150 injured.

Two hundred burqa clad girls were among those who surrendered and the number of militants in the mosque and a women's seminary was not known as armoured personnel carriers kept a tight vigil at Lal Masjid. Helicopter gun ships also circled overhead.

Curfew was imposed in the area surrounding the mosque and electricity to the complex cut in the night with authorities making repeated pleas to those inside the complex to surrender. President Pervez Musharraf [Images] has offered an Amnesty package to those who surrender.

The Pakistani forces resorted to tear gas shelling to drive out those holed up in the mosque, Chief Commissioner of the Islamabad Police, Chaudhry Iftikhar said.

This resulted in firing from inside the mosque, leading to heavy exchange of fire between the two sides, media reports said. Musharraf has cleared an operation, if necessary, to flush out the militants, DawnNews television reported.

Information Minister Mohammad Ali Durrani said the government was working to "ensure minimum loss of human lives during any operation against Lal Masjid."

There were reports that the helicopter gun ships were fired upon while flying close to the Lal Masjid.

Soon after surrendering, many boys and girls told the media that several thousand students, believed to be heavily-armed hardcore elements, continued to resist surrender and vowed to carry on their fight till death. Till this evening the government gave seven deadlines to surrender and wanted to offer some more before it decided to conduct an operation to flush out the hardcore elements.

Estimates of the remaining militants varied from 2,000 to 5,000 some of whom were believed to be members of the banned Jaish-e-Muhammad.

Lal Masjid's madrassas houses around 7,000 students, mostly hailing from poor families of remote areas of North West Frontier Province.

As the students surrender, they are being thoroughly screened with the clerics claiming that many of them were suicide bombers.

While the male students, who surrendered, were sent to Adiala prison for interrogation, the girls had been handed over to their parents.

Many of those surrendered complained that they have not received Rs 5,000, which offered by Musharraf as expenses to go home.

Some complained that they were being prevented from going out of the mosque while others said they came out of their free will. But most of them said they would again go back if they get an opportunity as they believed in devoting their lives to carry out 'jihad.'

Abdul Rashid Ghazi, who is the administrator of the mosque, continued to talk to the media over phone asserting that they would not surrender unless the government agreed for a negotiated settlement, which included their surrender before a team of religious clerics and not the military.

Some of those surrendered said they heard a speech by another top cleric Maulana Abdul Aziz in the afternoon but they had not seen him.

Some TV channels here speculated that Aziz slipped out of the mosque on Tuesday itself before the operation began but there was no confirmation yet.

Meanwhile the death toll in the exchange of gunfire between the two sides mounted to 21 and the government said it could confirm 16 deaths.

However, students surrendering before the military said they also saw four bodies of girls in the compound of the mosque.

"We are not sure about the figures and cannot confirm the story of bodies in the Masjid. We can confirm 16 deaths," Information Minister Muhammad Ali Durrani said.

Local Aaj TV, however, said the toll touched 21.

The government, meanwhile, ruled out extending amnesty to Aziz and Ghazi.

Minister of State for Information, Tariq Azim, said the two clerics would not get amnesty and face trial for terrorism, murder as well as abduction of Chinese nationals in Islamabad on June 27.