The police decided to storm the building after 24-year-old Mohamed Merah had threatened to kill police and refused to surrender late last night, Claude Gueant, the French Interior Minister said.
RAID police entered the flat on Thursday morning through the front door and the windows, after the shutters on the property were removed,
"We made contact with him (at 10.45pm last night) but he indicated that he would not surrender and that if we attempted to seize him he would kill the police, so the decision was made to seize him," Mr Gueant said.
He added that grenades were hurled into the property by RAID officers at around 10.30am this morning before police moved in fully "aware of the danger and threat" that lay before them.
Describing the raid, Mr Gueant said:
"We sent in special cameras to be able to see where he was but we could not locate him. It was when we were able to locate him in the bathroom that he came out shooting madly at everybody.
"The police had never seen anything like this kind of violence and the RAID officers had to protect themselves.
"In the end, Mohammed Merah jumped out of the window with a gun in his hand, still shooting. He was found dead on the ground."
Mr Gueant added that two police officers were receiving treatment following the firefight, one for a foot injury and another who is suffering shock. He said:
"I want to pay tribute to the extreme devotion and courage of the RAID police. I want to thank all the police for the incredible investigation that has been done. They managed to identify the killer in such a short period of time."
Merah is believed to have carried out three separate attacks in the past two weeks, killing three French paratroopers and then a rabbi and three children at a Jewish school on Monday.
Source has a video (not of the incident itself).