Twelve people are believed to have been shot dead in an attack at the offices of a French satirical magazine which angered some Muslims after publishing crude caricatures of Islam's Prophet Muhammad.
Police said several masked gunmen stormed the headquarters of the weekly Charlie Hebdo in Paris.
Benoit Bringer, a journalist with Agence Premiere Ligne, who saw the attack, told the iTele network he saw several masked men armed with machine guns.
Prime Minister David Cameronsaid: "The murders in Paris are sickening. We stand with the French people in the fight against terror and defending the freedom of the press."
Deputy Prime Minister Nick Clegg said the killings were a "barbaric attack on freedom of speech".
"My thoughts are with the victims, their families and their colleagues," he said.
The publication has launched a series of attacks on Muslim extremism and the last tweet on its profile ckening. We stand with the French people in the fight against terror and defending the freedom of the press."
Here is last tweet from the Charlie Hebdo twitter account, sent two hours ago, featuring an ISIS leader offering best wishes for the new year:
Meilleurs vœux, au fait. pic.twitter.com/a2JOhqJZJM
— Charlie Hebdo (@Charlie_Hebdo_) January 7, 2015
French president Francois Hollande said it was a "terrorist attack" which had left France in a state of shock.
He said: "At this moment we have 11 people killed, four critically injured. This is not the final figure.
"At least 40 people have been saved – we don't know the exact number of victims."
He said the French government would be holding an emergency meeting at the Elysee Palace and the security level in Paris had been raised.
He said: "We are looking for the perpetrators of this crime.
"France is today in shock, in front of a terrorist attack.
"This newspaper was threatened several times in the past. We need to show that we are a united country. We have to be firm, we have to be strong.
"We are at a very difficult moment. Several terrorist attacks have been impeded during the previous weeks. We are threatened because we are a country of freedom.
"We fight threats and we will punish the attackers.
"Eleven people are dead. We will look for the people responsible."
David Chour told the BBC from close to the scene: "A lot of people from the shops heard a lot of gunshots.
"Two guys entered with Kalashnikov guns and shot the people. I haven't seen them directly but people around said they just went away.
"People are very shocked. It is pretty serious."
Local news outlet Le Point has reported that staffers Jean Cabu, Stephane Charbonnier and Bernard "Tignous" Verlhac are among the dead.
Charlie Hebdo's website lists "Charb" as its publication director, and "Cabu" as artistic director.
Charbonnier was included in a 2013 Wanted Dead or Alive for Crimes Against Islam article published by Inspire, the terrorist propaganda magazine published by al Qaida.
French newspaper Le Monde reported that cartoonist Georges Wolinski had also been killed.
Charlie Hebdo's editor-in-chief Gerard Biard escaped the attack because he was in London.
He told France Inter: "I am shocked that people can have attacked a newspaper in France, a secular republic. I don't understand it.
"I don't understand how people can attack a newspaper with heavy weapons. A newspaper is not a weapon of war."
Biard said he did not believe the attack was linked to the magazine's latest front page, which featured novelist Michel Houellebecq, who has previously sparked controversy with comments about Islam.
And he said the magazine had not received threats of violence: "Not to my knowledge, and I don't think anyone had received them as individuals, because they would have talked about it. There was no particular tension at the moment."
Charlie Hebdo is a weekly political and social French newspaper with no adverts and its content is not influenced by external shareholders.
Its offices were firebombed three years ago after it published a special edition titled Charia Hebdo and "invited" the Prophet Mohammed as its guest editor.
No one was injured in the attack.
Speaking to the BBC after the attack in November 2011, the paper's editor-in-chief Stephane Charbonnier said the incident had only confirmed that it was right to take the stance that it did.
He said: "This tells me we are right to publish the magazine, and we are right to continue defying Islamists and make their lives difficult as much as they do ours.
"If we can poke fun at everything in France, if we can talk about anything in France apart from Islam or the consequences of Islamism, that is annoying."
Charbonnier – also known as Charb – said the attack was the act of "idiot extremists" and not representative of all Muslims who live in France.
In 2007, Charlie Hebdo reprinted 12 controversial cartoons of the Prophet Mohammad that were first shown in a Danish newspaper, Jyllands-Posten, and caused outrage in the Muslim world.
The magazine was sued for incitement to racism by two Islamic groups in France, but was cleared by a Paris court.
Charbonnier insisted that the publication of Muhammad caricatures was no provocation, but a signal that free speech was alive and well in the country.
He also said the paper would not stop criticising whatever it wanted.
On its Facebook page, the paper is described as "weekly satirical, political and social, without ads and or external influences".