UPDATE: 8pm

At least five Britons have been confirmed dead in the terrorist attack on a Tunisian holiday resort, with the death toll expected to rise.

Foreign Secretary Philip Hammond said because the resort is popular with holidaymakers from the UK "we have to assume that a high proportion of those killed and injured will have been British".

An Irish tourist was also among the 37 people who died in the attack when a young gunman pulled out a Kalashnikov hidden in a beach parasol and opened fire on sunbathers at the beach resort of Sousse.

The worst such attack in Tunisia's history came on the same day a man was found decapitated after an attack by suspected Islamic extremists on a French factory and a Shiite mosque in Kuwait was bombed killing at least 25 people.

Although the attacks do not appear to be directly linked they come after the so-called Islamic State called for their followers "to make Ramadan a month of calamities for the nonbelievers".

Tunisia's Health Ministry confirmed that those killed included Britons, Tunisians, Germans and Belgians. Thirty six others have been wounded.

Bodies covered in blankets were strewn across the beach and medical staff used sun loungers as stretchers to carry away the dead and injured.

Despite initially believing there was more than one gunman, the Tunisian authorities later said the killer was thought to be a young student who had not previously been known to their security services.

Witnesses said he used a Kalashnikov to shoot the tourists sunbathing on the beach at the Riu Bellevue Park.

His killing spree ended when he was shot dead by police. A bomb was found on his body.

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AT LEAST 27 people have been killed in a terror attack on two hotels in a Tunisian tourist resort.

One gunman was killed and another is being pursued in the town of Sousse, a popular holiday destination for Britons.

Photographs have been posted on Instagram showing a man on the beach wearing blue shorts lying face down in the sand with what looks like blood in the area around his head.

Empty sun loungers can be seen behind him and there does not appear to be anyone else near him.

Elizabeth O'Brien, an Irish woman on holiday with her two sons in the resort, described how she grabbed her children and ran for their lives when they heard gunfire erupting from one of the hotels.

"We were on the beach, my sons were in the sea and I just got out of the sea. It was about 12 o'clock and I just looked up about 500 metres from me and I saw a (hot air) balloon collapse down, then rapid firing, then I saw two of the people who were going to go up in the balloon start to run towards me - because I thought it was fireworks," the Dubliner told RTE Radio.

"So, I thought 'oh my God, it sounds like gunfire', so I just ran to the sea to my children and grabbed our things and as I was running towards the hotel, the waiters and the security on the beach started saying 'run, run run!' and we just ran to our room, which is like a little bungalow.

"So we are actually trapped in our room."

Ms O'Brien said the Irish consul in Madrid, Spain, called her to say it was a terrorist attack in the hotel next door and told her to stay where she was.

"My travel agent told me to go to the reception to speak to the rep, but I'm afraid. I'm stuck in the room with my two sons, not knowing what's going on," she said.

The Foreign Office said it is aware of the reports and was investigating.

Tension has been high in Tunisia since an attack on the National Bardo Museum in March which killed 22 people, mostly foreign tourists.

Sousse is a city on the east coast of Tunisia, about 87 miles (140km) south of the capital, Tunis. Around 1.2 million tourists visit Sousse every year, drawn by the hotels, sandy beaches and culture.

Thomas Cook, which has holidaymakers in the resort, said: "Thomas Cook has been advised of an incident that occurred earlier today in Sousse, Tunisia.

"At this time, details are not clear as to which property(ies) have been affected, with conflicting news reports.

"We are currently gathering information and will provide an update as soon as possible. Our teams on the ground are offering every support to our customers and their families in the area.

"We will continue to monitor the situation, working closely with the FCO and local authorities."

British holidaymaker Gary Pine is staying in the El Mouradi Palm Marina hotel close to where the incident happened.

Situated at the back of the hotel, near the pool area, he told Sky News by phone that he could no longer hear any noise and said the hotel was "very, very quiet" at that stage, but said it would have been very busy.

"The beach tends to be full up very quickly so it's the usual story of getting down to lay your towel at half past six to get a decent beach position, so all of the beach positions were taken," he said.

Mr Pine said that at the front of his hotel alone there would have been "several hundred" people, and he said he could see every resort along and there would have been "several hundred" more outside the others.

"So it's quite a busy beach.

"There's a lot of people walking up and down, taking in this lovely weather, so it's a very busy beach, but as I said it became apparent very quick that it was something more than firecrackers when you could hear bullets whizzing around," he said.

It is believed there are scores of Irish holidaymakers in Sousse at the moment.

While Dublin's Department of Foreign Affairs could not immediately confirm the number of citizens in the resort, it said there were no reports at this stage of any Irish hurt.

"Our embassy in Madrid and our Honorary Consul in Tunis are monitoring the situation in Sousse, Tunisia and are providing updates," a spokeswoman said.

"We are currently not aware of any Irish citizens involved in the incident.

"Anyone with concerns about family or friends can call the Department on 01 408 2000."

Holiday brands Thomson and First Choice said they were "aware of a suspected terrorist incident in Tunisia".

They added: "We are working closely with our teams in Tunisia and the relevant authorities to determine exactly what has happened and provide assistance to those affected.

"More information will be released as it becomes available."

A suicide bomber blew himself up in a failed attack on the beach in Sousse in October 2013, while 21 people lost their lives in an attack in the country earlier this year.

One Brit was killed in the terrorist attack in March at the Bardo National museum in Tunis, where gunmen stormed the tourist attraction and sparked a three-hour siege.

The country has undergone unprecedented social and political change since the 2011 uprisings and the Foreign and Commonwealth Office says there is a "high" threat from terrorism.

Maajid Nawaz, chairman of the counter-extremist Quilliam Foundation, told Sky News: "I think what has been happening in France is connected to what has been happening in Tunisia and elsewhere.

"It appears to be at the moment a coordinated attack by Isis on soft targets across the world."

A spokeswoman for Thomson and First Choice said: "We are working closely with our teams in Tunisia and the relevant authorities to determine exactly what has happened and provide assistance to those affected."

Gary Pine later told Sky News: "My 22-year-old son had just gone back into the sea after a game of volleyball and then over to my left about 100 yards away we saw what we thought was firecrackers going off so we thought someone was celebrating.

"But you could see then quite quickly the panic that was starting to ensue from the next resort along from us which is about 100 yards away and so then people started exiting the beach pretty quickly, but only when you can start hearing bullets around your ears did you start to realise it was something more serious than firecrackers."