The suspect being hunted in the Boston Marathon bombing is in a boat stored in a Watertown neighbourhood, a law enforcement official says.
The official said he was briefed on the situation and spoke on condition of anonymity because he is not authorised to discuss it publicly.
The official does not know if Dzhokhar Tsarnaev is dead or alive.
Authorities are telling residents of the area to stay indoors.
Heavy police presence in area of Franklin St in Watertown. Residents remain inside.— Boston Police Dept. (@bostonpolice) April 19, 2013
The burst of activity came at the end of a tense day in and around Boston.
It was less than an hour after police announced they were scaling back the hunt because they had come up empty-handed following an all-day search that sent thousands of SWAT team officers into the streets and paralysed the metropolitan area.
But then gunfire erupted and police in armoured vehicles and tactical gear rushed into Watertown.
Less than an hour after the hail of gunfire, a round of blasts could be heard.
A state police spokesman said only that the activity was related to the search for 19-year-old college student Dzhokhar Tsarnaev.
Boston Mayor Tom Menino told WBZ-TV the suspect was holed up in a boat parked in a backyard. Reporters were being kept away from the scene.
Before the gunfire, State Police Colonel Timothy Alben said at a news conference that he believed Dzhokhar Tsarnaev was still in Massachusetts because of his ties to the area.
But the authorities lifted the stay-indoors warning for people in the Boston area, and the transit system started running again by evening.
“We can’t continue to lockdown an entire city or an entire state,” Col Alben said. At the same time, he warned that Tsarnaev is a killer and that people should be vigilant.
Tsarnaev fled on foot after a furious overnight gun battle that left 200 spent rounds behind and after a wild car chase in which he and his brother hurled explosives at police. His brother, 26-year-old Tamerlan Tsarnaev, died in the shoot-out.
During the overnight violence, the brothers also shot and killed a Massachusetts Institute of Technology policeman and severely wounded another officer, the authorities said.
Law enforcement officials and family members identified the brothers as ethnic Chechens who came to the US from Russia. They lived near Boston and had been in the US for about a decade, an uncle said.
The bombings on Monday near the Boston Marathon finishing line killed three people and wounded more than 180, tearing off limbs in a spray of shrapnel and sparking fears across the nation that another terrorist attack had come to US soil. Among the dead was a Chinese student.
Around midday, as the manhunt dragged on, the suspects’ uncle Ruslan Tsarni of Montgomery Village, Maryland, pleaded on television: “Dzhokhar, if you are alive, turn yourself in and ask for forgiveness.”
The search by thousands of law enforcement officers all but paralysed the Boston area for much of the day. Officials shut down all mass transit, including Amtrak trains to New York, advised businesses not to open, and warned close to a million people in the entire city and some of its suburbs to stay inside and unlock their doors only for uniformed police.
“We believe this man to be a terrorist,” Boston Police Commissioner Ed Davis said. “We believe this to be a man who’s come here to kill people.”
Some neighbourhoods resembled a military encampment, with officers patrolling with guns drawn and aimed, residents peering nervously from windows and people near surrounded buildings spirited away.
The bloody turn in the case came just hours after the FBI released photos and video of two suspects in the bombing and asked for the public’s help in identifying and catching them.
Authorities said the man dubbed Suspect No 1 – the one in sunglasses and a dark baseball cap in the surveillance-camera pictures – was Tamerlan Tsarnaev, while Suspect No 2, the one in a white baseball cap worn backward, was his brother.
Chechnya has been the scene of two wars between Russian forces and separatists since 1994, in which tens of thousands were killed in heavy Russian bombing. That spawned an Islamic insurgency that has carried out deadly bombings in Russia and the region, although not in the West.
But investigators have shed no light on the motive for the Boston Marathon bombing and said it was unclear whether any terrorist organisations had a hand in it.
State Police spokesman Dave Procopio said police realised they were dealing with the bombing suspects based on what the two men told a carjacking victim during their getaway attempt.
Exactly how the long night of crime began was marked by conflicting reports. But police said the brothers carjacked a man in a Mercedes-Benz in Cambridge, just across the Charles River from Boston, then released him unharmed at a petrol station.
They also shot to death an MIT police officer, 26-year-old Sean Collier, while he was responding to a report of a disturbance, investigators said.
The search for the Mercedes led to a chase that ended in Watertown, where the suspects threw explosive devices from the car and exchanged gunfire with police.
A transit police officer, 33-year-old Richard Donohue, was shot and critically wounded.
Dzhokhar Tsarnaev somehow slipped away. He ran over his already wounded brother as he fled by car, according to law enforcement officials.
Tamerlan Tsarnaev died at a Boston hospital after suffering what doctors said were multiple gunshot wounds and a possible blast injury.
The brothers had built an arsenal of pipe bombs, grenades and improvised explosive devices and used some of the weapons in trying to make their getaway, said Representative Dutch Ruppersberger, a member of the House Intelligence Committee.
Another uncle, Alvi Tsarnaev, who also lives in Montgomery Village, Maryland, said that Tamerlan Tsarnaev had called him on Thursday night – hours before his firefight with police – and the two spoke for the first time in two or three years. He said the young man asked for forgiveness for the rift in the family.
The men’s father, Anzor Tsarnaev, said from the Russian city of Makhachkala that his younger son, Dzhokhar, is “a true angel”. He said his son was studying medicine.
“He is such an intelligent boy,” the father said. “We expected him to come on holidays here.”
According to the FBI, Dzhokhar Tsarnaev was seen setting down a bag at the site of the second of two explosions at the marathon finish line.