At least 140 people have been killed and 828 injured after the worst violence in decades swept through the capital of China's restive region of Xinjiang last night, authorities said today.

Hundreds were under arrest and thousands of riot officers and armed paramilitary police were keeping tight control of southern Urumqi, following vicious clashes between Muslim Uighurs and Han Chinese. But witnesses reported that protests had spread to a second city, Kashgar, in the north-western region.

In the capital, burnt-out buildings and vehicles were still smouldering in the area around the grand bazaar, where violence broke out. Bloodstains marked the road, along with sprays of broken glass and odd shoes, abandoned by their owners as they fled.

Hundreds of victims – predominantly Han Chinese, but also Uighurs and other minorities – remained in hospital having been beaten or stabbed. Officials said that some had also been shot.

Four-year-old Aliya, a Uighur boy, lay on a trolley, dazed by his head injury and his pregnant mother's disappearance. He was clinging to her hand when a bullet hit her and surgeons were now trying to save her life.

These are the testaments to the violence unleashed in Urumqi last night, along with graphic photographs, seen by the Guardian, of bloodied corpses lying in the roads. It was not clear how most of the victims were killed.

Witnesses reported Uighur rioters attacking Han Chinese people and state television showed them attacking passing vehicles. Videos – apparently taken in Urumqi last night – have surfaced of people who seem to be Han, being brutally beaten. But Uighurs and other ethnic minorities were also injured last night, and exile groups blamed the government crackdown for deaths.

Turkic-speaking Uighur Muslims make up almost half of Xinjiang's 19 million inhabitants. Many resent controls on religion, and increasing Han immigration, which they believe has eroded their way of life.

The Guardian was the only western media organisation on the first official tour of the city. Chinese authorities blamed Uighur exiles for stirring up violence, saying the unrest was "instigated and directed from abroad, and carried out by outlaws in the country in the region".

The state news agency, Xinhua, reported that the unrest "was masterminded by the World Uighur Congress" – led by Rebiya Kadeer, a Uighur businesswoman jailed in China before being released into exile in the US.

But the congress alleged that police shot and beat demonstrators to death, and that some Uighurs were crushed by armoured vehicles near Xinjiang University. It urged the authorities to "cease the brutal crackdown and release those arrested".

It said Uighurs had mounted a peaceful protest because authorities had taken no real action over the killing of two Uighur workers in ethnic violence in Guangdong more than a week ago.

Kadeer added: "It is a common practice of the Chinese government to accuse me for any unrest in East Turkestan and His Holiness the Dalai Lama for any unrest in Tibet."

Last night's violence had echoes of fatal riots in Lhasa last year which quickly spread to surrounding regions. In that case, too, the authorities blamed ethnic minority exiles for fomenting violence while Tibetans accused the government of a brutal crackdown.

Uighur and other residents were allowed to go about their business in the southern part of Urumqi today, despite the heavy paramilitary presence. Customers gathered in a market, although on many streets, shops were shuttered. But in a central area of town, well away from yesterday's violence, we saw armed officers detain two Uighur men outside a shopping centre and march them away.

Liu Yaohua, the region's police chief, told a press conference in Urumqi that police were searching for 90 key suspects in the city. Only those interviewed on the official tour agreed to be identified. Other residents who spoke to the Guardian would not give their names.

"It's not good to talk about it," said one Han worker. But he added: "Before this I felt safe, but a lot of Uighur people don't like us. They say there are too many Han people here."

A Uighur resident added: "It all started because some Uighurs were killed in Guangdong and people wanted to protest.

"There was a lot of fighting, but it was mostly Uighurs who got hurt. Uighur and Han people here really don't get on."

The size of the security cordon last night meant that few outside the area had any idea of the scale of the violence and destruction, although rumours about what had happened swept the city in the absence of real information.

Residents claimed access to the internet had been blocked across the whole of Xinjiang. Foreign phone numbers were inaccessible and mobile phone reception sporadic — blamed by citizens on the clampdown.

Dr Wang, head of the People's hospital, said 274 patients were still being treated. Doctors had been unable to save 17 people, and 27 remained in critical condition. Most had been beaten or stabbed, but the authorities said seven had been shot.

Video shot by officials at the hospital the previous night showed patients with blood streaming down their heads, lying or crouching on the floor because all the beds had long since been filled. Two, bandaged around the head, lay on the fruit barrow that friends had used to transport them.

More than two-thirds of the patients were male and the vast majority, 233, were Han. But 39 were Uighur, 15 Hui – another Muslim minority – and four came from other ethnic groups.

"I left my office and took the 63 bus home, but a gang of people stopped it and beat us – they cut me; there were three knives so my arm was cut in three places," said one victim, Liu Hongtao.

On the streets closer to the heart of the violence, red-eyed workers loaded sooty trays of cola bottles onto a trolley at Liu Jie's store, trying to salvage what little remained after the mob smashed its windows and torched the building.

Liu's hands were black and her clothing reeked of smoke. Her eyes filled with tears as she described how five attacks came within a few hours, from around 6pm.

"It was getting worse by 7pm and I told my workers to go home. When people broke the windows I fled myself. They were using big rocks," she said.

"They beat and killed Han people in the street. I was hiding in the courtyard behind the shop and they tried to break the gate, then the second group came. We were attacked five times, the last time at about 11pm and they set [the shop] on fire. We hid in the backyard until the armed police and fire service came to help. There were people killed on the street, they were chased, beaten and knifed. Physically I was not hurt but mentally I was seriously attacked."