(reuters) -- "The death toll rises to 25 people including police, hotel guards and residents. The death toll may rise. We suspect some other militants disguised themselves and escaped with the residents who were rescued," police officer Major Mohamed Hussein told Reuters.

"Three militants were captured alive and two others blew up themselves after they were shot," he added.

The attack began around at 5 p.m. on Saturday with a car bomb. Gunmen then stormed the building after the bomb had destroyed its defences. The siege ended on Sunday morning.

A Reuters witness saw seven bodies lying inside the hotel.

The explosion destroyed the front of the three-storey hotel and a next door hotel was also damaged. Many Somali officials live in fortified hotels because they offer better security from attack.

Terrorist group al Shabaab claimed the attack on Saturday. They want to overthrow the weak, U.N.-backed government and impose a strict extreme form of Islamic law.

(Photo: Somali soldier walk near wreckage of vehicles after a car bomb was detonated in Mogadishu, Somalia, Associated Press)