The operation involving more than 2,000 security forces has been ongoing for two weeks and the army's push to deploy troops, artillery and helicopter gunships is an unprecedented use of force by the military in Punjab.
"We (army) had given the Chotu gang until 2 p.m. today to surrender but they did not abide by the deadline," said a military official based in the district of Rajanpur where the battle is taking place.
Half of Rajanpur’s riverine area cleared
"Now there is no option left but a full-scale operation, which has started."
It was unclear just how many members of the Chotu gang, blamed for hundreds of cases of kidnapping for ransom, murder and robbery, were trapped on the island, but police said their families were believed to be accompanying them.
A private news channel also reported that a full-scale operation had been launched. TV footage showed army commandos firing machine guns at the island and gunship helicopters flying overhead.
Inter Services Public Relations (ISPR) announced that General Ishfaq Nadeem Ahmed, the most senior commanding officer in the area, had arrived earlier in the day "to see preparation for impending operation against criminals".
Rajanpur operation: Army takes charge of Zarb-e-Aahan, says ISPR
While the country's attention has for years been focused on the Taliban and al Qaeda threat on the Afghan border in the remote northwest, militants and criminals have quietly expanded their influence and won recruits in Punjab.
At least six police officials have been killed in the battle for the island, launched in a sweeping crackdown after a Taliban suicide bombing killed 72 people in Lahore last month.
A police spokesperson said policemen were among the 24 hostages.
Gangsters kill six, seize 15 policemen in Rajanpur
The battle was taking place near Rajanpur where the Panjnad River flows into the Indus.
Previous military crackdowns have focused on the lawless tribal regions where the Taliban and other militants are based. Paramilitary Rangers also launched a crackdown on criminals in the southern port city of Karachi in 2013.
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