DHAKA: Bangladeshi border guards who staged a bloody mutiny in the capital began surrendering their arms early Thursday after the prime minister offered an amnesty and agreed to meet their demands.

At least five people died in fierce gun battles after rank-and-file soldiers of the paramilitary Bangladesh Rifles (BDR) took up arms against their superiors, taking more than 100 people hostage.

The violence spread panic through the capital and dozens of people, many of them innocent passers-by, were wounded in the crossfire.

‘We want to announce happily that the BDR troops have started surrendering their arms to the home minister,’ local government minister Jahangir Kabir Nanak told reporters outside the compound early Thursday.

Home Minister Sahara Khatun entered the compound shortly after midnight accompanied by the national police chief to oversee the surrender of arms.

Nanak, who led the government's negotiations with the rebels, said Khatun would now go to the homes of officers held hostage during the siege.

However, the fate of the hostages, who included the head of the BDR and dozens of sector commanders and their families, was not clear.

Officials said tensions in the force had been simmering for months but exploded into violence when senior officers dismissed appeals for more pay, subsidised food and holidays.

Thousands of police and troops with heavy arms and canons had to be deployed outside the headquarters of the BDR and hundreds of Bangladesh University students were evacuated from their nearby dormitories.

Police and medical officials said at least five people were killed, including two top army officers whose bodies were found dumped in a drain outside their barracks, and 42 others wounded.

But private ATN Bangla television quoting a mutineer saying 10 more dead bodies were lying scattered inside the compound.

Prime Minister Sheikh Hasina held talks with the rebels late Wednesday, offering an amnesty. Tauhid, an assistant director of BDR, said she had agreed to meet their demands ‘gradually.’

The mutiny was the biggest challenge to face Sheikh Hasina since she took office less than two months ago after a landslide election victory that ended two years of army-backed government.

She appeared keen to bring a quick and peaceful end to a stand-off that highlighted the frustrations felt by many Bangladeshis, including high food prices, a sluggish economy and rampant corruption within the country's ruling classes.