Abaaoud is an Islamic State fighter who was previously thought to be in Syria after fleeing raids in his native Belgium earlier this year.

Paris prosecutor Francois Molins said the identities of the dead were still being investigated, but that neither Abaoud nor the fugitive attacker Abdeslam was in custody.

“At this time, I’m not in a position to give a precise and definitive number for the people who died, nor their identities, but there are at least two dead people,” he told reporters.

Watch: Two reported dead as French police move in on more suspects linked to Paris attacks

A female suicide bomber who blew herself up was among the casualties of a dawn raid in the northern Paris suburb of Saint Denis, which began just after 4am.

Gunfire and explosions rocked the Saint Denis area in the north of the capital near the Stade de France stadium from before dawn as terrified residents were evacuated or told to stay in their homes.

Earlier, the prosecutor’s office had said the dead included a woman who detonated an explosive vest and a man hit by projectiles and grenades.

But at a later news conference, Molins backed away from the earlier statement that the woman blew herself up, saying: “This point needs to be verified by an analysis of the body and human remains, as well as by all the forensic police operations that have to be carried out.”

He said telephone surveillance and witness reports "led us to believe" that Abdelhamid Abaaoud, the suspected mastermind of Friday's series of attacks in Paris that killed 129 people, had been in the apartment.

Law enforcement authorities were joined by dozens of French military shortly after fighting broke out.

Two people were reported killed, including the female suicide bomber, and seven arrested, one of whom was a landlord who lent his apartment to two other suspects who have been detained by police.

“I was asked to do a favour... I didn’t know they were terrorists,” the man told AFP.

A seven-year-old police dog, named Diesel, was also killed during the operation according to French authorities.

Residents of the Paris suburb, some of whom were evacuated in their underwear, said they had been caught in a terrifying exchange of fire. Hayat, 26, had been leaving a friend's apartment where she had spent the night when the shots erupted.

"I heard gunfire," she said. "I could have been hit by a bullet. I never thought terrorists could have hid here."

Firemen said they had joined the operation against “an armed group holed up in an apartment” at 4.31am, without giving any further details.

The area was still closed down on Wednesday morning as police cleaned the area, with French authorities warding off pedestrians who came too close to the operation.

A special armed response unit took part in the raid, which comes as nations across Europe put police and the public on high alert after footage from the scene of one of Friday's attacks revealed a ninth suspect may have taken part.

All transport in the area was halted throughout the morning and schools in Saint Denis will be closed on Wednesday, according to authorities.

Police also carried out multiple raids in southwest France. The operations were part of an anti-terrorism strategy but not directly linked to the Paris attacks, an investigator said.

French President Francois Hollande was to hold discussions yesterday on extending to three months the state of emergency declared after the worst attacks in French history. Lawmakers will vote on the proposal today and tomorrow.

As police stepped up the hunt for the fugitives, French and Russian jets pounded Islamic State targets in the group's Syrian stronghold of Raqa for a third consecutive day.

The French aircraft carrier Charles de Gaulle steamed from the southern port of Toulon on yesterday, heading for the eastern Mediterranean to participate in intensified airstrikes against Islamic State targets.

As police stepped up the hunt for the fugitives, French and Russian jets pounded IS targets in the group's Syrian stronghold of Raqqa for a third consecutive day.

France and Russia have vowed merciless retaliation for the Paris attacks and last month's bombing of a Russian airliner, also claimed by the Islamic State group, which have galvanised international resolve to destroy the jihadists and end Syria's more than four-year civil war.

“It's necessary to establish direct contact with the French and work with them as allies,” Russian President Vladimir Putin said as France prepared to send an aircraft carrier to the eastern Mediterranean.

Hollande will meet Putin in Moscow on November 26, two days after seeing US President Barack Obama in Washington.

Police have issued the photograph of one of the three men who blew themselves up outside the Stade de France, who investigators have established entered Europe through Greece, as hundreds of thousands of refugees have done this year.

He was found with a Syrian passport near his body, but investigators have not confirmed that he was the man in the document and are appealing for anyone who recognises him to come forward.