RIYADH, Saudi Arabia (Reuters) - Suspected al Qaeda suicide bombers mounted a devastating attack on a Riyadh residential compound of foreigners mostly from Arab states Sunday, killing between 20 and 30 people and injuring up 100, diplomats said.

The huge explosion that gutted the Muhaya compound in the west of Saudi Arabia's capital occurred after Western nations issued fresh terror alerts and Washington shut its missions in the kingdom, the world's biggest oil exporter.

Saudi officials said virtually all the residents at the bombed compound were Arabs. One resident said most were Lebanese, Egyptians and Syrians.

"This is a crime against innocents which is in the style of al Qaeda. It is an al Qaeda operation," a Saudi security source told Reuters. "This is a suicide operation."

As rescuers searched amid rubble and raging fires, a Saudi-based senior Western diplomat said: "We don't have an exact toll and this is initial, but our best guess is that between 20 to 30 were killed and 50 to 100 were injured."

One American was injured and another was reported missing, a U.S. diplomat said, but it was unknown if they were of dual nationality. In Washington, a State Department spokeswoman said: "It appears that no U.S. diplomats live at the compounds."

Saudi Arabia, birthplace of Islam, is battling a surge in Islamist violence. Supporters of al Qaeda leader Osama bin Laden have threatened both Saudi rulers and Western expatriates who hold key jobs in the kingdom.

A Western diplomat said Saudi Interior Minister Prince Nayef and some other Saudi royals had private homes near compound. "It was about half a mile from one of the houses of Prince Nayef," the diplomat told Reuters.

"WHOLE WALLS BLOWN OUT"

A Reuters correspondent at the scene said: "I saw two bodies, one being carried away and another lying on the grass of the compound. Whole walls of the 200 villas were blown out and glass covered the compound."

The explosion gouged a crater five meters (yards) wide and two meters deep. Children's toys were strewn among the rubble.

Soldiers, police, medics and firefighters rushed to try to find survivors under the rubble, using detectors and search lights. Helicopters flew overhead and police sirens wailed.

The acrid smell of explosives filled the air and smoke was rising from the rubble hours after the attack.

The powerful explosion shook windows in central Riyadh several kilometers (miles) away.

A Saudi television correspondent said witnesses told him two cars drove into the compound and exploded inside.

"I can see one of the cars which is completely destroyed and I can see human remains," said the reporter. "We don't know how many terrorists were in the cars."

The attack, in the Muslim holy month of Ramadan, occurred nearly six months after triple suicide bombings at Riyadh housing compounds on May 12 killed 35 people, including nine Americans.

Saudi Arabia blamed those bombings on al Qaeda. A purported bin Laden audio tape released last month promised more suicide attacks inside and outside the United States.

The Saudi TV reporter said many of the injured taken away by ambulance were children under the age of 10.

HEAVY GUNFIRE

A Jordanian resident at the compound who identified himself only as Alaa said he heard heavy gunfire before the explosion.

"I heard shots, many shots, and then one big explosion. "Many villas were damaged, four or five even collapsed. My house was far away but my windows were shattered," he told Reuters.

Arabic Al Arabiya television network showed footage of the injured covered in blood in hospital.

"Four villas out of a total of 200 villas are occupied by Westerners, the rest are Arab nationals," Hanady al-Ghandakli, director of Muhaya compound, told Al Arabiya, which is partly Saudi-owned.

"There is one French family, one British family, two German families, Italians," she said, adding security guards were stationed outside.

Arab television reports said three Americans and three Canadians of Arab origin were among the casualties.

"This is a crime against Arabs and Muslims and innocent people and those who carried out this evil act are defiling Islam," one survivor told Al Arabiya.

Saudi forces have killed five Islamist militants in clashes since Monday, when authorities said they had foiled a planned attack on Muslim pilgrims in the holy city of Mecca.

Friday, the United States issued its second security warning on Saudi Arabia in almost as many weeks, saying terrorists were planning attacks in the kingdom. U.S. missions were shut in the kingdom Saturday for a security review.

Britain's embassies in the neighboring Gulf states of Bahrain and Qatar warned British nationals of a high threat of terrorist attacks against Western targets in those countries.