Twenty-three children aged between six months and 15 years, who were taken hostage by a murder accused after inviting them to his daughter's birthday party, were rescued late on Thursday night after police killed their captor in a village in Uttar Pradesh.

The hostage situation began at Kasaria village in the afternoon and continued for about eight hours.

'The accused was killed and there were about 23 children who were rescued safely,' additional chief Secretary (home) Awanish Awasthi told reporters at a hurriedly called press conference at 1.20am.

'The accused had invited the children for the birthday party of his daughter and held them hostage. It started about 5.45pm on January 30 and continued for about eight hours,' director general of police (DGP) O. P. Singh said, adding that in the entire operation they had tried to 'engage' the accused and were successful.

He said the accused, identified as Subhash Batham, had initially released a six-month-old girl by handing her over to his neighbour from a balcony.

Eyewitnesses said a restive crowd gathered outside the house where the children were kept with some women wailing and praying for their safe release.

The crowd broke open the door of the house to rescue the children, they said.

As the accused opened fire, the police retaliated killing him on the spot.

In the exchange of fire, the captor's wife was injured, but none of the children suffered any injury.

A man and two policemen also suffered bullet injuries.

The motive of the accused was not known immediately.

Chief minister Yogi Adityanath monitored the situation in Farrukhabad, which is nearly 200km from state capital Lucknow.

'The CM as soon as he got to know about the incident called a meeting of crisis management group and personally monitored the situation and ensured children are rescued safely,' Awasthi said.

Earlier, a team of NSG (National Security Guard) commandos had taken a special aircraft to reach Farukhabad, a senior security official in Delhi said.

Police said Batham, a murder accused, seemed to be mentally unstable.

Inspector general of police, Kanpur Range, Mohit Agarwal, said, 'The man called the children for a birthday party and held them hostage in the basement of the house. He fired six shots from inside the building.'

Batham initially wanted to talk to the local MLA, but refused to speak to the leader when he arrived, Agarwal said.