M By John Daniszewski and David Holley

OSCOW, Oct. 26 – Police commandos armed with sleeping gas and blazing guns stormed a theater here early today and overcame Chechen separatists holding about 700 hostages. Authorities said they were forced to launch the rescue after rebels began to kill captives.

The leader of the hostage-takers and around 30 of his companions were “liquidated,” officials said.

There was still no official word about the toll among the hostages. An Australian diplomat was told that the number was no more than 10, and that none of the estimated 75 foreigners were among the dead. But a police officers said he saw “a lot of corpses.”

In addition, two hostages were confirmed killed before the operation began.

Nevertheless, as former hostages were being taken away in buses, Deputy Interior Minister Vladimir Vasilyev told reporters: “We have succeeded in preventing massive death and the destruction of the building” by the militants, who had vowed to die in the name of Islam and for the cause of Chechen independence.

It was a swift and violent ending to a hostage crisis that began Wednesday evening when 40 to 50 Chechen rebels interrupted a performance of a Russian musical and took the audience and most of its cast hostage.

Reporters at the scene began hearing explosions and gunfire at around 5:30 this morning. By 7 a.m., it was all over, with Russian troops in control of the theater and forensic experts examining the corpses.

Several of the hostage-takers were captured and a few may have escaped into the city, said Vasilyev, calling on Muscovites to give them no help and report any sightings to authorities.

“I would like to warn bandits and society that we have all information about them and that if they give up, we will guarantee their lives,” he added.

Information about the number of hostages killed by the rebels or in the cross-fire was sketchy early today. News agency photographers at the scene said they could see “dozens of bodies” being carried off. But it wasn’t clear whether they were hostages or the rebels who, some with explosives strapped to their bodies, had accompanied Chechen rebel leader Movsar Barayev on his desperate bid to bring the Chechen war to Moscow.

It was also unclear how many of the purported bodies were in fact dead and how many were suffering the effects of a sleeping gas used in the assault, according to state television reports.

The Chechens’ audacious raid, less than three miles from the Kremlin, ignited a fresh debate here about the wisdom of Russia’s war in the breakaway Caucasian republic.

At a school where the relatives of the hostages had held their vigil, women could be seen crying and men praying as they waited to hear whether their loved ones would be coming home. When the relatives heard that Barayev was dead, they cheered and whistled their approval.

Valery Shantsev, the deputy mayor of Moscow, said the night’s killing began when the Chechens inside the building shot to death a man outside the theater who they believed was trying to enter the building. Later, a spokesman for the police said that the rebels had killed two of the hostages and wounded two others.

When the killing began, police spokesman Pavel Kudryavtsev said, a group of hostages tried to make a break from the building and were shot at by the Chechens. That was when special federal police commandos, the Spetsnaz, moved in.

A Spetsnaz officer, who gave his name only as Andrei, described the storming of the theater to a Los Angeles Times reporter.

“It lasted about 40 minutes. We got a sudden order … definitely not planned. We believe the nerves of some of the hostages failed and they decided to try to escape no matter what,” he said.

“Naturally, the terrorists started shooting and that is when we got the order to move in. … We fired and sometimes we could not see the difference between the hostages and those who held them. There are a lot of corpses there, and there are a lot of wounded people.”

A hostage named Natalia Skoptseva was on her phone talking to the Echo Moskvy radio station when the assault began.

“We beg you not to storm the building,” she was saying.

Just then, another hostage named Anna came on the line.

“They let some gas in,” she said, referring to the police. “We feel it. We now are breathing into handkerchiefs. They are taking us! They will kill us! Soldiers are coming!”

The tape then became a cacophony of the sounds of shooting and screaming as the assault took place, before the recording went dead.

“When we got permission to go into the building to collect the bodies of our friends, we saw a horrible sight,” said Dmitri Bogachyov, commercial director for the “Nord-Ost” musical showing when the rebels took over.

“Everything was smashed and … people were laying around everywhere, on the floor, in the chairs. They looked like they were dead, but in fact were alive. I have never seen anything more horrible in my life and I am sure the scene will haunt my nightmares for some time.”

Russian television gave no details on the type of “sleeping gas” used during the assault.

Police would not have moved if the militants had not begun killing the hostages, authorities insisted. “Over the past two hours, the fighters unexpectedly opened fire and killed two of their hostages, and wounded two more, a woman and a man,” Kudryavtsev, the police spokesman, said at 6 a.m.

After that, several dozen camouflaged Russian troops were spotted by reporters moving in the direction of the theater and a group of ambulances arrived at the scene. An armored personnel carrier maneuvered nearby.

Authorities said that President Vladimir V. Putin was kept abreast of the operation. The terrorists had demanded that he withdraw the estimated 80,000 Russian troops now in the republic of Chechnya or the hostages would be killed.

The action occurred after a day of increasing tension. Government officials said they tried without success to come up with a proposal that would draw the hostage-takers into serious, detailed negotiations.

The threat to kill hostages Friday reached the outside world from several sources: an actor held captive inside the theater who made a telephone call to the theater director in Moscow; a journalist calling from Turkey who managed to reach one of the hostage-takers; and a respected mediator, journalist Anna Politkovskaya.

Politkovskaya, an independent journalist who spent five hours inside the theater with the rebels Friday hoping to mediate the crisis, said the mood among the tired, hungry and unkempt hostages had been of enormous forbidding. She also said that the hostage-takers appeared to her to be determined in their lethal intent.

“They seriously mean to blow themselves up, together with the hostages, if the demands are not met,” she said. “I have little doubt about that.”

Politkovskaya, who cut short a U.S. visit this week to return to Moscow, was allowed to meet with about 20 of the captives in a room separate from the main auditorium, but still under the eyes of the rebels.

“Even in Chechnya I haven’t seen people in such a demoralized state as the hostages I spoke with,” she told the Los Angeles Times early today. “They have lost all hope. They think the country has abandoned them and no one will help them.”

On Friday, 19 hostages, including eight children, had been released from the theater by their captors. The children, one toting a teddy bear, all appeared healthy in spite of their ordeal.

But efforts of foreign ambassadors in Moscow to secure the release of an estimated 75 foreigners fell through. Among the hostages were two or three Americans, U.S. officials said.

Meanwhile, in the Chechen capital of Grozny and other parts of the republic where Russian forces are in control, many Chechen officials and ordinary people on Friday condemned the hostage-taking, with rallies against it held in various districts.

“Right after I heard that hostages were taken in Moscow, I became terrified, because I thought that the situation in Chechnya can only get worse because of that,” said Tamara Khamkhoyeva, an ethnic Chechen student at the University of Grozny. “Cruelty gives rise to another cruelty, and nothing good can be expected from cruelty.”