BBC cameraman Simon Cumbers has been killed and security correspondent Frank Gardner seriously injured in a gun attack in the Saudi capital, Riyadh.
Surgeons operated overnight on Gardner, who was hit in the stomach
Irishman Cumbers, 36, was a freelance journalist and cameraman while Gardner, 42, is the BBC's security correspondent and a leading expert on al-Qaeda.
Gardner underwent hours of surgery, after which he was critical but stable.
UK Prime Minister Tony Blair said his thoughts were with the families of the men attacked.
"This is a struggle against these terrorists who will kill innocent people who are involved in our democracy," Mr Blair told the BBC.
"We have seen since September 11th and Bali and Madrid that they are a threat in literally every part of the world and we have to be vigilant and get out and get after them and make sure we deal with this issue."
Riyadh's police chief said the attack was carried out by "unknown elements" on Sunday afternoon.
The two men travelled to Saudi Arabia last week following terror attacks in the city of Khobar and were in the al-Suwaydi suburb of Riyadh with a Saudi government minder when the attack happened.
They were filming the house of an al-Qaeda militant killed last year when they came under fire.
The BBC's Paul Wood reports that the suburb is known as a militant stronghold and home to 15 of the 26 most wanted men in Saudi Arabia, including Abdul Aziz al-Muqrin, suspected leader of al-Qaeda in the kingdom.
BBC Director of News Richard Sambrook said that Gardner had undergone "extensive surgery" overnight, having suffered wounds mostly to his abdomen.
He added that both reporters would have been aware of the danger.
"Nobody knew Saudi Arabia or knew the sort of risks they were undertaking better than Frank who had lived and worked in Saudi Arabia and spoke fluent Arabic and who was an expert on al-Qaeda and on terrorism," he told BBC Radio 4's Today programme.
Recent statements by Islamic militants have made clear that any Westerner in Saudi Arabia is considered a legitimate target.
The reports Gardner and Cumbers had already filed from Saudi Arabia spoke of a new climate of fear among expatriates.
Security sources said the gunmen had escaped and roadblocks had been set up in an effort to catch them, Reuters news agency reports.
The men's minder is believed to have escaped unharmed and is now being questioned, Saudi security sources say.
UK Foreign Secretary Jack Straw described Gardner as an "outstanding reporter who always seeks to do everything he can to explain the dangerous world we live in to the BBC audience".
The BBC men were attacked in a district notorious for militancy
He said he had met Cumbers on a reporting assignment to Iran and Iraq last year.
"He was a great guy in many ways, larger than life. It makes his death all the more tragic," he said.
Offering his condolences, the Saudi ambassador to the UK, Prince Turki al-Faisal, said he knew Gardner personally as a "highly respected journalist".
"He has been vigorous in his pursuit of the truth behind the terrible evil of al-Qaeda which haunts us all," he said.
The attack comes a week after the hostage crisis in Khobar, in which 22 people were killed by suspected Islamic radicals.
The Foreign Office has advised against all but essential travel to the country, with officials believing militants are planning further attacks after the Khobar killings.
The British ambassador to Saudi Arabia, Sherard Cowper-Coles, said the shooting underlined the "serious and chronic terrorist threat" faced by people in Saudi Arabia, and British and US expatriates particularly.