A total of 27 people are believed to have been killed in an attack on the Hotel Imperial Marhaba in the Tunisian resort town of Sousse.
According to the Tunisian interior ministry, at least one gunman has been shot dead and another is being pursued in an “ongoing” operation.
Tunisia interior ministry spokesman Mohammed Ali Aroui described the victims as mostly tourists.
Local radio has reported those killed were mostly German and British.
The British Foreign & Commonwealth Office said in a statement: “Some attackers may still be at large.
“Any British nationals in these hotels or nearby should remain indoors, and contact their tour operator and the Foreign Office on the hotline number below.
“For security reasons they should not advertise their location on social media or when speaking to journalists.”
The Foreign Office has set up an emergency number for friends and family of those who may have been affected: 020 7008 0000.
A statement from travel agent group ABTA read: “We estimate there are approximately 20,000 customers currently on holiday with ABTA Members in Tunisia but there will also be a number of holidaymakers who have travelled independently.
“The situation is still developing and we are liaising with our Members, the Tunisian authorities and the Foreign and Commonwealth Office concerning the welfare of holidaymakers in Tunisia and the most appropriate actions to take.”
Some 424,707 British nationals visited Tunisia in 2014, staying mostly in coastal resorts.
According to figures from the World Travel & Tourism Council tourism plays a pivotal role in Tunisia’s economy, generating over 15 per cent of the country’s GDP at around US$7.4 billion, and supporting nearly 14 per cent of total employment in 2014.
Tunisia has been on high alert since March when militants killed 22 people in an attack on a the Bardo Museum in the capital Tunis.
Many of the dead were international tourists.