Soldiers loyal to President Karimov opened fire on 5,000 protesters outside the local government headquarters and then retook the building from rebels who had held it since Thursday night.

The rebels had attacked a jail overnight and freed prisoners accused of Islamic extremism, before occupying the government offices, leaving at least nine people dead and 34 injured. Thousands of protesters then gathered outside the building to call for the resignation of President Karimov, who has ruled Uzbekistan with an iron fist since Soviet times.

“The nation has been tortured by the totalitarian regime of President Karimov and by corruption at all levels of the state,” one man told the crowd through a loudspeaker, as others paraded on a makeshift stage with Kalashnikovs slung across their chests.

“The people demand justice, freedom and democracy,” he said.

President Karimov himself rushed to Andijan — Uzbekistan’s third-largest city — and troops cordoned off its centre, where the rebels were holding ten police officers as hostages. After negotiations failed, an army truck and an armoured personnel carrier drove into the crowd carrying soldiers who fired in all directions, scattering the protesters.

Witnesses said that at least three people were killed but one protest leader said that the death toll could be as high as 50.

A government statement broadcast on state television said: “The militants are sheltering behind women, children and hostages. They will not compromise with the authorities.” The troops then retook the government headquarters and freed the hostages, according to Russian media.

By late evening the insurgency appeared to have been quelled, with soldiers spreading throughout the city, and President Karimov was reported to be returning to Tashkent, the Uzbek capital. The violence was the worst in Uzbekistan since nearly 50 people were killed in suicide bomb attacks and shootings in March last year that the Government blamed on Islamic extremists. It came only two months after riots over the border in southern Kyrgyzstan snowballed into a revolution that toppled the Government.

Andijan is in the Ferghana Valley, a densely populated, impoverished region and a fertile recruiting ground for Islamic extremists. Yesterday’s violence was apparently triggered by the trial in Andijan of 23 businessman accused of belonging to Akramiya, a banned fundamentalist group.

There were peaceful demonstrations this week to demand their release and some locals said that yesterday’s attack, in which the defendants were freed, was prompted by rumours that police were rounding up the protesters.

“There are bodies lying in the streets, and the buildings are on fire,” a journalist, who asked not to be identified, said. “If the Government does not do something, this will get out of control.”

Uzbek authorities jammed foreign television channels inside Uzbekistan, and Kazakhstan, Kyrgyzstan and Tajikistan closed their borders.

The Government says Akramiya is a branch of the banned Islamic group Hizb ut-Tahrir, which it accuses of staging suicide bomb attacks. But Western officials, terrorism experts and regional political analysts say Hizb ut-Tahrir, while calling for the establishment of an Islamic caliphate, does not advocate terrorism.

Human rights groups accuse the Government of jailing thousands of moderate Muslims and political dissidents and torturing prisoners. One rebel leader said: “This is the limit. Our relatives started to disappear. We suffered too much, it has to be stopped.”

Some observers also accuse the US of playing down its criticism of Uzbekistan’s human rights record since President Karimov allowed Washington to use an airbase there for operations in Afghanistan in 2001.

The issue was highlighted last year by Craig Murray, the former British Ambassador to Uzbekistan, who was recalled after accusing Britain and America of condoning torture in Uzbek jails.