"We've made a list of names and nationalities. It looks like there are at least 29 children," said a witness, who asked not to be named.
"This is not an official list - it's what people can remember," she said, adding that at least one teacher had been taken hostage with the pupils of International School of New York, a private English-language school.
The children are aged between two and six and are believed to be from Australia, Britain, Cambodia, Canada, France, Indonesia, Japan, Singapore, South Korea, the Philippines, Taiwan, Thailand, Switzerland, and the US, she said.
"As far as we can piece it out, six kidnappers came in. They seemed to be bandits of some kind... They seemed to be on the run and it looks like they entered without much of a plan."
The men, believed to be armed with a single AK-47, had demanded six more of the machine guns, six grenades, $1000 and a van to take them to Thailand, the witness said by telephone.
"They entered about 8:30 or 9am (0130 or 0200 GMT) this morning. The kids are really little," she added.
"As far as we can piece it out, six kidnappers came in. They seemed to be bandits of some kind... They seemed to be on the run and it looks like they entered without much of a plan"
"The hostage-takers are demanding money, cars and weapons. We are still negotiating with them, but no solution has been reached," Siem Reap provincial deputy police chief Ung Oeung said on Thursday.
District police chief Pheun Arun said police had provided the kidnappers a vehicle as they requested.
"We provided them with a car about 20 minutes ago, but nobody has come to take it... We have taken the car into the school premises and its engine is running," he said.
The witness confirmed a van was driven into the school compound and said its driver had run back outside to where a large crowd was gathering.
"There's a big crowd here, a lot of parents. The parents are getting quite concerned because it's after lunch and the children are very small, and they are wondering what will happen when they get tired and cranky," she added.
Prak Chanthoeun, a deputy military police commander, said up to 20 students were being held and none had been released.
"The parents are getting quite concerned because it's after lunch and the children are very small, and they are wondering what will happen when they get tired and cranky"
The witness said several dozen policemen had surrounded the school. She added that children in a second building entered by the kidnappers had left unharmed, but was unsure whether they were released intentionally or escaped.
Soldiers and police sealed off the area around the school, a resident said.
Ou Em, bureau chief of the serious crime department in Siem Reap, said: "We are pointing guns at them now." He declined to comment further.
Approximately 70 students attend the school, located about 1km outside Siem Reap on the road that leads to the international airport.
Cambodia is still recovering from
decades of civil war
The resort town, next to the famed 800-year-old Angkor Wat temple complex, is home to a sizeable expatriate population, with many working in the aid and tourism sectors.