The army said all 500 patients and staff were freed unharmed.

I thought deaths would be high on both sides. I'm glad only the guerrillas were killed

Woman hostage

The security forces stormed the hospital shortly before dawn and fought an hour-long battle with members of the ethnic Karen rebel group, the self-styled God's Army.

Once the firing stopped, black-clad commandos emerged from the hospital flushed with triumph.

The bodies of the God's Army guerrillas on display

Ten blood-spattered bodies were lined up outside the complex, and rusty guns and tattered possessions belonging to the teenage hostage-takers were put on display.

However, journalists were not given access to the released hostages to verify the army's claims that no-one was hurt.

There also were reports that some hostage-takers might have changed into civilian clothes and escaped among the hostages.

Two police officers were wounded in the gun battle.

'Action necessary'

The authorities in Thailand defended the bloody operation, saying the rebels' actions had been an unforgivable affront.

First Army Region Commander Lieutenant General Taweep Suwannasingh told a news conference that the tough response had been necessary.

"If we had prolonged the situation it would have got worse for the patients," he said.

Before the security forces moved in, the authorities had given the impression they would negotiate a peaceful end to the siege.

The rebels were attacked by Burmese forces last week, reportedly suffering heavy casualties. The fighting drove about 1,000 refugees over the border into Thailand.

The hostage-takers had demanded that Thailand open the border to the refugees and stop shelling rebel positions to deter them from coming across.

Counter attack

This is a statement from Thailand - you can no longer do this kind of thing to us

Thai National Security Adviser

At least 12 explosions rocked the compound as six truckloads of commandos rushed into the hospital at 0540 local time on Tuesday (2240 GMT Monday).

The soldiers exchanged machine-gun fire with the gunmen who had taken control of the hospital, 75 miles west of the capital, Bangkok, early on Monday.

Hundreds of badly-shaken hostages were taken from the scene in ambulances.

Hospital staff shortly after the ordeal ended

The gunmen had previously released at least 70 people, mostly the sick, elderly, women and children, and 17 others had escaped through a back door.

Soldiers equipped with mine detection devices went through the hospital, checking for booby traps.

Doctors in the hospital had said the gunmen, armed with grenades and automatic weapons, had rigged up explosives around the building.

Tough stance

The Thai authorities had been keen to take a tough stand against the dissidents.

Just three months ago, they allowed a group of rebels who seized the Burmese embassy in Bangkok to go free in exchange for releasing hostages.

The national security adviser to the prime minister, Prasong Soonsiri, issued a strong warning to rebel groups.

"[The raid] is a statement from Thailand that you can no longer do this kind of thing to us. If you are hurt and need medical treatment we are happy to help. But we won't stand sieges."

God's Army is a small group that broke away from Burma's Karen National Union ethnic guerrillas, which has been fighting for greater autonomy for 50 years.

The group is run by 12-year-old twin brothers, Johnny and Luther Htoo, whose followers believe the pair have mystical powers that make them invulnerable during attacks.

It is not known if they were involved in the siege.