The NIA says the leader of the hostage-takers, Abu al-Baraa, was killed during the offensive and that the army attacked the kidnappers’ vehicles as they attempted to transport hostages.
Four hostages were rescued alive, according to the agency, and some still remain in captivity.
Among those still held, are thought to be American, Belgian, Japanese and British citizens.
The source said Westerners were among the dead, but did not elaborate.
There is no independent confirmation of the reports, but both the British and French governments said on Thursday afternoon that an an operation was underway at the In Amenas gas plant.
There have been differing reports from Algeria throughout the day.
RFI’s correspondent in Algeria, Leila Beratto, told RFI in a live broadcast in French at 1500 (Universal Time) that « the only thing of which we are sure is that the Algerians have broken off negotiations with the islamists. At the beginning of the afternoon, the Algerian army bombarded a column of vehicles of kidnappers who were trying to escape In Amenas. It was the third attempt at escape by the hostage-takers. They tried to take 5 hostages with them but were pushed back. Algeria agreed to negotiate with the hostage-takers on condition that they left the hostages at the base unharmed. The Algerians said they would allow the kidnappers to leave the country if they complied. But because the kidnappers did not respect the conditions, negotiations were halted.”
Earlier, NIA had quoted a member of the group which seized the hostages as saying Algerian helicopter gunships had opened fire on the complex.
On Thursday, 15 foreigner and 30 Algerian hostages managed to escape, Algerian media reported, citing officials.