Yemeni troops have retaken a military headquarters in a deadly assault on Al-Qaeda-linked militants who seized it this week and took a number of hostages.

Yemeni troops have retaken a military headquarters in a deadly assault on Al-Qaeda-linked militants who seized it this week and took a number of hostages, the defense ministry said Thursday.

The Wednesday operation, in which all the militants were "annihilated" and a still-unclear number of hostages killed, comes a week after a spectacular series of ambushes on army posts in which more than 50 soldiers and police were killed.

"The armed forces have successfully completed the assault on the headquarters of the Second Military Region at Mukalla and have thoroughly cleansed it of terrorist elements," a defense ministry source was quoted by the official Saba news agency as saying.

"All terrorists... in the building were annihilated," the statement added, without announcing the fate of the captured troops.

Medical and other military sources said at least 12 people, including five soldiers, were killed in the assault to retake the building in Mukalla, in southeast Yemen.

A military official confirmed earlier that at least three of the soldiers taken hostage were among the 10 dead.

He later said two special forces soldiers were also killed.

"Efforts are ongoing to find other possible victims under the rubble," said the official, who said most of the building's third and top storey had been destroyed.

Gunmen from the Al-Qaeda-affiliated Ansar al-Sharia group seized the complex on Monday after a suicide bomber rammed a car into the entrance.

The army soon retook most of the building, except for the top floor, where the militants held the soldiers captive.

A military source told media outlets the army had fired on the building with artillery.

Mukalla is the capital of the southeastern province of Hadramawt and is a major port city.

Al-Qaeda in the Arabian Peninsula (AQAP) has intensified its attacks in southern Yemen during the recent months.