MANILA — Philippine police shot and killed a sacked former policeman who was holding 15 Hong Kong tourists hostage aboard a bus in downtown Manila on Monday.

Philippine President Benigno Aquino later said eight Hong Kong tourists were killed during the dramatic hostage siege in the Philippine capital.

In Hong Kong, Chief Executive Donald Tsang called it a "major tragedy", and expressed disappointment with the handling of the incident by Filipino authorities.

The gunman, identified as 55-year-old former police captain Rolando Mendoza, was armed with an M-16 assault rifle.

He was allegedly sacked from the Manila police over robbery and drug claims and during the hostage crisis he demanded his former job back.

"The hostage-taker was killed. He chose to shoot it out with our men," police Colonel Nelson Yabut told reporters.

"On our first assault, Mendoza was sprawled in the middle of the aisle and shot one of our operatives. On our second assault we killed him."

The end of the 11-hour drama came more than an hour after police commandos had moved in to break windows and surround the bus following a series of shots. The driver of the bus was seen running to safety after the first flurry of gunshots.

A Hong Kong woman, who survived the hostage siege and identified herself as Mrs Leung, told reporters that her husband was killed as he tried to stop Mendoza from attacking other passengers on their tour bus.

Leung, still in shock as she was carried out from the bus, demanded to know why Manila police came to their rescue so late.

"It's too late. Why were there no one to help us after so many hours?" she said at the scene of the siege, in comments broadcast on Hong Kong's Cable TV.

The crisis began Monday morning when the hostage-taker asked the tour guide for a free bus ride at 10 am, Susanna Lau Mei-sze, general manager of Hong Thai Travel Services Ltd, told Hong Kong media.

After the guide refused, Mendoza forced his way onto the bus and declared he was taking the passengers hostage and asked the driver to lock the door, Lau said.

"This is an unexpected hijacking incident, not aimed at Chinese people," Wang Xiaobo, Chinese consul to the Philippines, told China Daily.

He said officials at the Chinese embassy arrived at the scene immediately after the crisis began and asked the Philippine police to ensure the safety of the hostages.

"At about 10:30 am we received information about the hijacking. The tour leader called Hong Kong secretly from the back of the bus and reported to us. He spoke only a few words and hanged up the phone," Lau said.

Live television footage showed the bus parked in front of a grandstand at Rizal Park, a popular tourist destination a few blocks from police headquarters.

The tour group consisted of 20 Hong Kong tourists — three children and 17 adults — and a Hong Kong tour guide, as well as two Philippine tour employees.

A 66-year-old woman accompanied by a Philippine tour guide left the bus first, and was replaced by two local photographers as hostages. Three children and a woman were released later at noon. An elderly man (aged 72) was freed at 1:30 pm and a Filipino was released at 2:45 pm.

Sharpshooters took up position around the bus as negotiators stood just outside, talking into the driver's window.

Mendoza insisted that police authorities clear his name and said he wanted his job back.

He originally set a deadline for 3 pm and then postponed it to 3:30 pm and demanded to talk to reporters.

At 4:30 pm, Mendoza released another local man.

Mendoza's brother, Gregorio, who was also on site to help negotiations, told a local TV station his brother was upset by his dismissal from the force. Mendoza was honoured by police chiefs in 1986 as one of the top 10 officers in the country.

According to newspaper reports from 2008, Mendoza was among five officers charged with robbery, extortion and issuing threats after a Manila hotel chef filed a complaint alleging the policemen falsely accused him of using drugs to blackmail him.

"We have formed a special task force within the Security Bureau to deal with the matter," Ambrose Lee, Secretary for Security at the Security Bureau of the Hong Kong SAR, told the media in Hong Kong.

The four-day tour group left Hong Kong for Manila on August 20 and were scheduled to catch flight CX802 on Monday night and arrive in Hong Kong at 9:55 pm, Lau said.

She said that the agency had contacted the families of the tourists.

Zhang Chunyan reported from Beijing. Dong Jidong, Zhou Wa in Beijing, Guo Jiaxue in Hong Kong contributed to this story.