Mohammad Ejaz-ul-Haq, Pakistan's religious affairs ministers, said on Sunday that "terrorists, militants, who are wanted within, and outside, the country" were inside the mosque.
He added that the government believed that Abdul Rashid Ghazi, the mosque's deputy leader, had effectively been deposed. 'Hardcore militants'
"Ghazi is no longer in control. The hardcore militants are in control of the mosque," he said. "Our fear is that they may start killing the women and children to press for their demand for safe passage."
Ghazi told Pakistani television channels that more than 300 of his followers, mostly female students, had been killed in overnight gun battles. The government dismissed the claim.
Ghazi has refused to surrender, saying he would prefer "martyrdom".
In a statement carried by Pakistani newspapers on Sunday he said that he and his followers hoped their deaths would spark an Islamic revolution.
"We have firm belief in God that our blood will lead to a revolution," the cleric wrote. "God willing, Islamic revolution will be the destiny of this nation."
Pervez Musharraf, Pakistan's president, attended the funeral of Colonel Haroon Islam, the elite commando killed in the clashes overnight, on Saturday before holding meeting with officials to discuss the government's options.
Hundreds of troops have been surrounding the Lal Masjid, or Red mosque, in Islamabad since Tuesday when clashes between the armed students and security forces began after months of tension.
Security forces have not mounted a full-scale assault on the compound because of fears for the safety of hundreds of women and children who the government says are being held as human shields.
More than 150 religious students who had surrendered to authorities were returned to their families on Sunday.
The students, aged between 15 and 18, had been detained in Adiala jail in Rawalpindi since they fled the Red mosque.
|More than 150 students who fled the mosque |
have been returned to their families [AFP]
Kamal Hyder, Al Jazeera's correspondent in Islamabad, said that the authorities had said that wounded students would be allowed out of the mosque compound to receive treatment.
"The movement that we are being told is taking place is possibly the preparation for the final assault ... we are also being told there are suicide bombers inside," he said.