Sky News reports that Prime Minister David Cameron held an emergency meeting following news that a hostage crisis is underway at a British Petroleum gas field in Algeria.
An al Qaeda affiliated group said the raid had been carried out because of Algeria's decision to allow France to use its air space for attacks against Islamists in Mali, where French forces have been in action against al Qaeda-linked militants since last week.
The attack in southern Algeria also raised fears that the French action in Mali could prompt further Islamist revenge attacks on Western targets in Africa, where al Qaeda in the Islamic Maghreb (AQIM) operates across borders in the Sahara desert, and in Europe.
AQIM said it had carried out Wednesday's raid on the In Amenas gas facility in Algeria, Mauritania's ANI news agency reported.
The Algerian interior ministry said: "A terrorist group, heavily armed and using three vehicles, launched an attack this Wednesday at 5 a.m. against a Sonatrach base in Tigantourine, near In Amenas, about 100 km (60 miles) from the Algerian and Libyan border."