A government official said the mutiny in Dhaka was under control and urged members of the Bangladesh Rifles (BDR) border guards who had also mutinied over pay and command elsewhere in the country to lay down their arms.

Gunfire gradually subsided and stopped in the capital after Prime Minister Sheikh Hasina warned of tough action in a national broadcast, a day after offering the mutineers an amnesty.

"All the rebel troops have surrendered with their arms and the process has been completed," Hasina's media spokesman Abul Kalam Azad said of the BDR troops in the capital.

At least six government tanks and 10 armoured personnel carriers were in position around the BDR headquarters in Dhaka, where violence on Wednesday killed nearly 50 people.

"The situation is now under complete control of the government and those who broke discipline to create violence outside the capital have been asked to surrender as well," Azad said.

The turmoil underscores the challenges faced by Hasina, who took office only last month after winning parliamentary elections in December that returned Bangladesh to democracy after nearly two years of army-backed Emergency rule.

The mutiny began on Wednesday at the BDR's Dhaka headquarters and shooting there and in the immediate vicinity accounted for the known deaths so far.

Shooting incidents involving BDR troops erupted in more than a dozen other towns on Thursday, local police said, but Reuters reporters later said calm was gradually returning.

Mobile phone services were ordered cut by the government to stem rumours and misinformation, one operator said, making it difficult to find out what was happening around the impoverished South Asian nation. Coverage resumed later on Thursday.

"Lay down your guns immediately and go back to barracks. Do not force me to take tough actions or push my patience beyond tolerable limits," Hasina warned restive BDR troops in her national broadcast on Thursday afternoon.

"Give democracy and the economy a chance to develop."

DESERTED

Dhaka streets were largely deserted and residents were tense as they waited to see what happened next.

Bangladesh, home to more than 140 million people, has had several military coups since independence in 1971, but this week's mutinies are over pay, benefits and command structure, officials and local media said, not politics.

Traditionally the BDR is led by army officers. Some BDR troops want commanders drawn from their own ranks.

Hasina said she was prepared to do as much a she could to meet their demands gradually but said they must first surrender to authorities.

The main duty of the BDR troops is guarding the country's borders, but they often back up the army and police in meeting other defence and security requirements.

As the government worked to restore order in Dhaka on Thursday, shooting began from BDR units scattered across the country. A Reuters reporter in Sylhet in the northeast said BDR troops were ‘coming on the street holding up guns and shooting’.

BDR members barricaded a highway linking two districts in the southern region while they took over camps from army commanders at several places, local officials said. There were no immediate reports of casualties in those actions.

The unrest is a blow to hopes Hasina's government could bring stability that would attract much-needed investors and boost development to Bangladesh, where around 40 per cent of the populace live below the poverty line.

Analysts said the mutinies pose a major challenge for Hasina in keeping together the powerful defence forces -- which have often intervened in the country's politics -- and in tackling their grievances without risking further discord.

"This poses a huge challenge for the Prime Minister and her government, who need to be tactful in trying to resolve it," said retired Major General Azizur Rahman, a former BDR chief.