"I believe that in the last few minutes the Dhaka hostage situation has been resolved, that is the report we are receiving out of Dhaka," she told reporters.

"There are reports that 6 gunmen have been killed. There are also reports that a number of other people are unaccounted for and they may have been killed."

Ms Bishop confirmed all Australian Embassy staff were safe.

Bangladeshi police say gunmen attacked the restaurant in the diplomatic area of Dhaka late on Friday and took about 20 hostages, including foreigners, before police stormed the building to free between eight to 10 people trapped inside.

"Our commandos have stormed into the restaurant. Intense gunfighting on," Mizanur Rahman Bhuiyan, a deputy director at the Rapid Action Battalion force, said on Saturday.

Ms Bishop said she understood ISIS had claimed responsibility for the attack but said that had yet to be confirmed.

When Rescue Operation Began, the sound of two big explosions has been heard from inside the Dhaka restaurant where security forces battled militants holding dozens of hostages, and a police official says five bodies were seen lying in pools of blood.

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