By Zeeshan Haider

ISLAMABAD, July 8 (Reuters) - Pakistani security forces tightened their noose around a besieged mosque in Islamabad on Sunday after President Pervez Musharraf told militants barricaded inside to surrender or die.

Hundreds of troops were surrounding the fortified compound housing the Lal Masjid, or Red Mosque, and a girls' madrasa (seminary) in the Pakistani capital, where clashes between armed students and security forces began on Tuesday after months of tension.

Security forces have not launched a full-scale assault because of fears for the safety of hundreds of women and children inside who the government says are being held as human shields.

Instead, troops have blown holes in the perimeter wall in the hope of letting those inside escape.

Gunfire broke out shortly after 1 a.m. (2000 GMT on Saturday) as paramilitary forces provided cover for commandos to move forward, said an intelligence official who declined to be identified.

Three big blasts sounded across the city about 20 minutes later, apparently as the commandos blew up more of the compound wall.

"Our strategy is to bring down the walls or make holes in them to make escape routes for the women and children being held hostage," said another security official. "We hope it works."

The death toll rose to at least 20 on Saturday when a paramilitary soldier was killed.

The cleric leading the Lal Masjid's Taliban-style movement, Abdul Rashid Ghazi, said up to 80 people had been killed inside his compound. The government dismissed that.

Fifty to 60 hardcore militants were believed to be leading the fighting, officials said.

"SURRENDER OR DIE"

Musharraf, in his first public comment on the confrontation, said the militants had no option but to surrender.

"If they don't surrender, I'm saying it here, they will be killed," Musharraf told reporters on Saturday. "We've shown great patience because we don't want people to be killed."

The Lal Masjid has been a hotbed of militancy for years, known for its support for the Taliban in Afghanistan and opposition to Musharraf's backing for the U.S.-led campaign against terrorism.

Water, gas and power to the mosque were cut and food was said to running short. Security forces occupied another city madrasa linked to the Lal Masjid.

Ghazi has defied orders to surrender, saying he would prefer "martyrdom". He rejected government accusations that he was holding women and children as human shields.

Ghazi said he and his followers would lay down their weapons but would never accept arrest.

"If compromise means bowing down. It's unacceptable to my boys, my girls and me," Ghazi told ARY Television on Sunday.

About 1,200 students left the mosque after the clashes began but only about 20 came out on Friday. On Saturday, just one gave himself up.

Officials said they did not know how many people remained inside but there could be up to 2,000.

(Additional reporting by Kamran Haider)

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