They had strapped bombs to the hostages and warned that any attempt to free them by force would meet a "tragic end".
Yesterday the al-Qa'ida kidnappers who had been holding 41 westerners at a gas plant since Wednesday proved as good as their word as a full-frontal attack by the Algerian army ended in a bloodbath.
Up to 34 hostages and eight terrorists are believed to have been killed when helicopter gunships fired at "anything that moved" inside the compound at In Amenas.
Whether the hostages were victims of "friendly fire" whilst being used as human shields, or were killed in cold blood by their kidnappers may not be known for some time, but the loss of innocent lives was exactly what western leaders had feared when they had earlier pleaded with Algeria to exercise caution following Wednesday's hostage-taking by the Masked Brigade.
Some of the hostages had been able to speak to their relatives by mobile phone, and yesterday morning the news was as bad as it could be.
One unnamed French hostage told the TV station France 24 that the captives had been "grouped together" and several expatriates had been forced to "wear explosive belts".
The Algerian army had surrounded the remote gas plant and the leader of the kidnappers, known as Abu al-Baraa, had said he would "open the way for negotiations with the countries of the hostages" if the Algerian army fell back.
Three hostages, including an unnamed Briton, spoke to the Al Jazeera news station asking the army to withdraw.
The Briton, almost certainly speaking under duress, said: "We are receiving care and good treatment from the kidnappers. The army did not withdraw and they are firing at the camp. We say to everybody that negotiation is a sign of strength and will spare many a loss of life."
A Japanese hostage said he and a Norwegian man had been wounded by sniper fire, and an Irish hostage, believed to be Stephen McFaul said he had told his embassy that the situation was "deteriorating", and urged the Algerian military to pull back.
The Algerian government had offered the kidnappers a take it or leave it deal: quit Algeria without the hostages. The Masked Brigade, who had demanded the withdrawal of French troops from neighbouring Mali, refused and the Algerians, in keeping with their policy towards insurgents during their years of civil war, went in with all guns blazing.
The assault appears to have been triggered by an attempt by the terrorists to either move the hostages between locations or to break through the military cordon in a convoy of 4x4 vehicles. According to one report, three of the vehicles were destroyed when the helicopters strafed the convoy, almost certainly with the loss of hostages' lives, and a fourth vehicle was reportedly blown up by a suicide bomb.
"Their 4x4 trucks were hit first, and then gunfire was turned on people in the complex," said an Algerian diplomatic source. "There are numerous casualties."
One French government source said the Algerian attack had triggered "assassinations of hostages in horrible conditions".
The kidnappers told a news agency in Mauritania that 34 hostages had been killed, along with 15 kidnappers, but Algerian government sources put the figures at six hostages dead, with eight kidnappers. A Briton was said to be among the six, taking the number of Britons killed to two following the earlier death when the hostages were snatched.
Kidnap leader al-Baraa was also among those killed, and the terrorists warned that the remaining hostages would be "blown up" if the army moved in.
At 11.30 the Algerian prime minister, Abdelmalek Sellal, told his British counterpart, David Cameron, in a phone conversation that the operation was already well underway.
Mr Sellal insisted he had no choice but to act "immediately", reportedly because he feared the hostages were about to be killed.
Following the initial helicopter attack, ground troops surrounding the gas plant moved in, but in the hours that followed more hostages appear to have lost their lives during a fierce and prolonged firefight.
Some of the hostages, including Belfast engineer Stephen McFaul, managed to surreptitiously text their families with updates, telling them "not to worry".
But Algerian hostages, scores of whom appear to have been allowed to leave, were told by the terrorists that the western hostages were going to be killed.
One local man who escaped from the plant said the kidnappers had told him they would not harm Muslims but "Christians and infidels" would die. They told him: "We will kill them."
As the fighting continued, four of the western hostages managed to escape and get to safety. They included Mr McFaul and a British man.
The fate of several hostages remained unclear last night. Seven westerners were said to be among hostages still inside the compound, and Alex Salmond, Scotland's first minister, said a "number of Scots" were among the original hostages. A man from Northern Ireland is still thought to be captive.
Mr Cameron yesterday decided to cancel his trip to Amsterdam, where he had been due to deliver a long-awaited speech today on Britain's future in Europe, to deal with the crisis. (© Daily Telegraph, London)