British nationals have been told to avoid an upmarket area in Kenya's capital Nairobi after a terrorist attack at a shopping centre.

Gunmen armed with AK47s and grenades opened fire inside the Westgate Mall in the affluent Westlands area of the city and witnesses have reported seeing at least 10 bodies.

The Foreign Office said it is "urgently looking into" the incident. Nairobi police chief Benson Kibue has called it a terrorist attack and said there are about 10 terrorists involved.

Large groups of people were seen streaming out of the centre, some of whom were covered in blood and clutching small children. Shopping centre guards used trolleys to wheel out several wounded children and at least one man.

The volleys of gunfire moved outside the centre after police arrived nearly half-an-hour after the attacks began and engaged the gunmen.

A Foreign Office spokesman said: "We are aware of the incident at the Westgate Mall shopping centre and we are urgently looking into it. We stand ready to provide consular assistance if there are any British nationals involved." The Foreign Office updated the travel advice on its website to say: "British nationals should avoid the area."

Kenya has seen a rise in terror attacks and threats in recent years, some of which are believed to be in retaliation for a military crackdown on the militant group al-Shabaab. The attacks often involve gunmen armed with automatic weapons and grenades, and their targets include bars, nightclubs and restaurants in various parts of the country.

There was a suspected al-Shabaab attack which left five dead and three injured at a restaurant in the eastern city of Garissa in January, and in August last year one person was killed and six more were left injured in the Eastleigh area of Nairobi on the eve of a visit by Hillary Clinton, then the United States secretary of state. Last month 18 of the 19 US embassies and consulates across the Middle East and Africa were closed after a message between al Qaida officials about plans for a major terror attack was intercepted.

One witness to the shopping centre attack claimed the gunmen told Muslims to stand up and leave and that non-Muslims would be targeted. Al-Shabaab vowed in late 2011 to carry out a large-scale attack in Nairobi in retaliation for Kenya's sending of troops into Somalia to fight the Islamic insurgents.

Foreign Secretary William Hague said: "We are in close contact with the Kenyan authorities on the ground in Kenya and at ministerial level in the United Kingdom. The prime consideration at present is the welfare of members of the public caught up in this incident." Concerned British nationals are advised to monitor FCO travel advice and to contact 020 7008 0000.