It was reported last night that around 30 British citizens were believed to be "at risk".
Mr Cameron told MPs that the Algerian government had not warned him it was planning to take military action to end the terrorist attack at a gasfield despite his request to be kept informed.
The Prime Minister said the situation in Algeria was "continuing" but he hoped it would be resolved shortly.
It was reported two Scots hostages were freed last night.
Freed Scot Mark Grant, 29, was among dozens of staff at a gas installation in the Sahara taken hostage by Islamist militants.
The other two Scots taken hostage are from Fife and Renfrewshire.
Mr Cameron has promised the UK will do everything it can to hunt down the terrorists responsible for the "brutal and savage" attack in Algeria.
The Prime Minister updated a sombre House of Commons following the attack on a gas installation in the Sahara desert in which at least one Briton was killed and others were taken captive.
"There is no justification for this hostage-taking and we will continue to do everything we can to hunt the people down who are responsible for this and other such terrorist outrages," he told MPs.
Reports suggested four foreign workers had been killed and seven injured along with up to 15 rebels.
But politicians admitted the picture emerging following the incident at the gas complex in the desert was "confusing".
Foreign Office Minister Alistair Burt said: "I am afraid we should be under no illusion that there will be bad and distressing news to follow from this terrorist attack.
"Those who have been working with the families will continue that work of advice and support, though this will take some time.
"We have already increased our consular staffing in Algiers and we are pressing the Algerian authorities to have access to UK nationals at the site so that we can help with repatriation and evacuation."
Shadow Foreign Secretary Douglas Alex-ander said events were "grave" and "tragic".
Algerian communi-cations minister Mohamed Said Belaid said: "The operation was successful in neutralising a large number of terrorists and freeing a large number of hostages but unfortunately, we are sorry to say, there were deaths and injuries."
A spokesman for the militants said 35 host-ages and 15 rebels had been killed in the rescue when Algerian heli-copters strafed the site.
Earlier, the Irish Government said one of its nationals – Stephen McFaul, 36, from west Belfast – had been freed and has made contact with his family.
The Government's emergency Cobra committee met twice yesterday, with Mr Cameron in the chair.
