The Islamist militant group al-Shabaab has stepped up its campaign to topple the Government in Somalia, storming a hotel in the capital and killing 33 people, including six MPs.

Bodies were strewn all over the seaside hotel in a supposedly safer area of war-torn Mogadishu after insurgents got past security by disguising themselves as police.

Witnesses, including one MP, described the scene at the Muna Hotel as a "massacre" with gunmen hunting guests from room to room, before blowing themselves up after security forces surrounded the building. The Information Minister, Abdirahman Osman, said "the blood of the dead is leaking out of the hotel".

The worst attack of its kind since four ministers were murdered by a suicide bomber at a university graduation in February, it comes as al-Shabaab intensifies its campaign to oust the weak, United Nations-backed Government. At least 74 people have been killed since heavy street fighting restarted on Tuesday.

The Government said the militants had ignored an appeal for a truce during Ramadan and condemned the attacks as "against Islam".

The hotel killings come after al-Shabaab threatened a "massive war" if the African Union goes ahead with plans to reinforce its 6000-strong peacekeeping force in Mogadishu. Most of south and central Somalia is now controlled by a patchwork of extremist militant groups, of which al-Shabaab is the strongest.

The transitional Government, which controls only a handful of streets in the capital, is wholly reliant on the African force, made up of soldiers from Uganda and Burundi. Officials admit they would by overrun within hours by Shabaab if the peacekeepers were withdrawn.

The African Union and its international backers have found themselves drawn into a test of strength with the Somali militants, who proved their ability to strike beyond the borders last month with twin bombings in the Ugandan capital.

Seventy-seven people were killed in suicide attacks at two Kampala nightspots as they watched the World Cup final, in an attack al-Shabaab said was retaliation for the presence of Ugandan troops in Somalia.

Despite millions of dollars in foreign support and arms shipments from Washington, the Somali Government has been unable to establish any authority on the ground. Some analysts have argued for an end to all foreign interference in Somalia.

A spokesman for al-Shabaab said yesterday's hotel assault had been carried out by "special forces" sent to kill those "aiding the infidels".

One MP who survived said she was woken by the sound of shots. She said guests on the upper floors had tried to escape by crawling out windows.

"Smoke filled my room after bullets smashed my window," she said. "I hid myself in a corner of the room. Then a guest next door came to my door, screaming, 'Come out! Come out!' And when I came out bullets continued to fly around. I went back to my room and locked my door. Shortly afterwards, the hotel staff asked me to come down and put me in a room on the second floor with four other survivors."

The fact that the massacre happened in Mogadishu's equivalent of Baghdad's "green zone", a small Government-controlled enclave on the waterfront, raises doubts over the UN's plans to re-establish a mission in the capital.

For 16 years the UN, like most international agencies, has based its Somalia operations in neighbouring Kenya.

This month the UN announced the Somalia mission would return to Mogadishu within 60 days as the new African Union force was expected to improve security.