The Russian Itar-Tass news agency, quoting hospital officials on Wednesday, said this brought the number of civilians killed in the hostage seizure in Beslan, North Ossetia province, to eight.
In addition, at least one rebel was killed in a gun battle with police in the early stages of the seizure.
Earlier, 15 pupils were released after regional Muslim leader Mufti Ruslan Valgatov entered the school to negotiate with the armed group.
According to Beslan officials, Valgatov was trying to establish contact with the armed group who have taken teachers, students and parents hostage.
Aljazeera had reported that the hostage-takers were refusing to speak to Valgatov and would only speak to government officials.
"Talks are going on right now," North Ossetia's Prime Minister Mikhail Shatalov said.
The hostage-takers have called for the release of fighters imprisoned in neighbouring Ingushetia, Interfax news agency reported.
They also said they would kill 50 children for each hostage-taker killed, and 20 for each one that is wounded.
First school day
The siege comes on the first day of the Russian school year, when it is likely that a large number of parents accompany their children to class.
There have been contradicting reports on the number of hostages being held at the school, with some saying 120 people had been taken and others indicating as many as 400.
President Putin has cut his holiday
short to deal with the latest crisis
Russian television quoted law-enforcement officials as saying that 200 pupils had been taken captive, along with 40 parents and teachers.
But a spokeswoman for President Vladimir Putin, Irina Terkina, said: "There could be up to 400 children and teachers held hostage."
The Interfax news agency, citing Ismel Shaov, a regional spokesman for the Federal Security Service, said there were 17 male and female attackers.
Local authorities said the kidnappers who seized the school in North Ossetia - a predominantly Christian region with a small Muslim community - carried guns and were wrapped in bomb belts.
Russian political analyst Lina Sobonina told Aljazeera: "Russian Intelligence believe they are suicide members belonging to Chechen leader Shamil Basayev."
She added: "Three bodies have been found at the gate of the seized school, probably belonging to parents of children who have escorted them on their first day.
"They might have been killed when they protested against taking their children hostages."
The war in Chechnya has spilled
over into neighbouring regions
The hostage-takers have threatened to blow up the building if police storm it, Interfax said.
Interior Ministry troops and police poured into the area around the school and officials reported an exchange of fire with the group, the latest in a wave of violence to hit Russia in recent days.
"One of the attackers was killed. We have no information about casualties among the civilians," Itar-Tass said, quoting local police.
An initial report had said a second school may also have been seized but this was later dismissed.
Nearly 50 children - separate from the 15 released - escaped from the school earlier. Reports said the children started leaving in small groups when shooting died down.
Aljazeera's correspondent in Russia reported that the armed group also released a woman from the school, saying it wanted to negotiate with the president of the northern Russian Ossetia province.
Political analyst Sobonina said the recent attacks of a bomb blast in Moscow and two airplanes crashing simultaneously after leaving Moscow, coincide with the presidential elections in Chechnya.
"Unfortunately, all these operations prove the Russian Intelligence failure in resisting these terrorists," she said.
But Chechen rebel leader Aslan Maskhadov denied that his forces were responsible for the attack.
"There is some information reporting a new possible suicide operation in Moscow," Sobonina added.
Russian President Vladimir Putin broke off his seaside holiday on Wednesday to return to Moscow.
He was in the Black Sea resort of Sochi where on Tuesday he had met German Chancellor Gerhard Schroder and French President Jacques Chirac. He had been due to visit Turkey this week but cancelled his plans.
The Kremlin said Putin summoned his interior minister and the head of the FSB security service to discuss the crisis.