Soldiers and the attackers are continuing to exchange fire at the city's Taj Mahal hotel on Thursday, where more than 100 people are feared to be trapped.
Commandos are also attempting to free up to 30 people believed to be held hostage in the Oberoi Trident hotel.
The fighting continued a day after about 100 armed men launched an attack, firing indiscriminately and throwing grenades after landing in Mumbai aboard inflatable boats.
Six attackers have been killed and nine others arrested since the violence began on Wednesday night, police said.
'Senseless violence'
At least nine foreign nationals are among the dead, police said.
Manmohan Singh, India's prime minister, said: "It is evident that the group that carried these attacks, based outside the country, had come with single-minded determination to create havoc in the commercial capital of the country."
"I strongly condemn these senseless acts of violence against innocent people, including guests from foreign countries.
"The well-planned and well-orchestrated attacks, probably with external linkages, were intended to create a sense of terror by choosing high-profile targets."
Witnesses at the hotels that were attacked said the gunmen had singled out British and American citizens.
"They kept shouting: 'Who has US or UK passports?'" Ashok Patel, a British citizen who fled from the Taj Mahal hotel, said.
Hotel besieged
Several European legislators, visiting Mumbai ahead of a European Union-India summit, were among those inside the Taj when it was besieged.
Indian police said eight locations were targeted in what they called "terrorist attacks".
The historic Chhatrapati Shivaji train station, Leopold Cafe and the police headquarters in southern Mumbai were hit.
Al Jazeera's Riz Khan, reporting from Mumbai, said the targeted buildings were popular with both tourists and locals.
"They were clearly chosen by the attackers to give their assaults maximum exposure," he said.
Mumbai was in a state of shock following the co-ordinated attacks, said Shai Venkatraman, a correspondent with the private New Delhi Television channel.
"Mumbai is not new to terror, but this has really shocked people. There is a stunned silence," she told Al Jazeera.
"This has really damaged Mumbai's reputation, even though it is a city that is usually quick to come back.
"This time, the attack has really shaken the people."
The attackers also stormed the Mumbai headquarters of Chabad Lubavitch, an Orthodox Jewish group, where a rabbi and his family were staying.
Rabbi Gabriel Holzberg's wife and a two-year-old child were later freed after Indian commandos entered the Chabad building.
Holzberg was reported to have been injured.
Group claims responsibility
A little known group calling itself the Deccan Mujahedeen claimed responsibility for the attack in emails to news organisations.
Mahan Abedin, an insurgency analyst, told Al Jazeera: "At this stage, that name does not necessarily mean that much.
"We have seen an increase in recent years in indigenous Indian Muslim organisations beginning to take a violent stance towards the Indian state and sections of the Indian society, particularly the commercial elite of places like Mumbai, in order to highlight, they would say, the sheer inequality of life in India.
"There is a middle class of around 100 million who live very well but 800 million-plus people live in miserable conditions," he said.
At least 11 police officers, three senior police chiefs, including Hemant Karkare, the chief of the city's anti-terrorism squad, were killed during the fighting.
The motive for the attacks was not immediately clear, but India has witnessed a series of co-ordinated attacks in recent months.
A little-known group called the Islamic Security Force-Indian Mujahedeen, claimed responsibility for a series of blasts last month in which 80 people died in the northeast state of Assam.
Six weeks earlier, the capital New Delhi was hit by a series of bombs in crowded markets that left more than 20 people dead.
Those attacks were claimed by a group calling itself the Indian Mujahedeen.
Agencies
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