Both the Taliban and the Islamic State group are active in Kabul.

Dozens of people were wounded with fatalities feared in a Taliban-claimed attack which saw a powerful car bomb rock Kabul early Monday, followed by gunmen who battled special forces in an area housing military and government buildings.

The rush-hour explosion sent a plume of smoke into the air above the Puli Mahmood Khan neighbourhood of the Afghan capital and shook buildings up to two kilometres away, with an AFP reporter saying he could hear gunshots after the blast.

"At first, a car bomb took place and then several attackers took over a building. The area is cordoned off by the police special forces and (they) are bringing down the attackers," interior ministry spokesman Nasrat Rahimi said.

Health ministry spokesman Wahidullah Mayar tweeted that 65 wounded people, including nine children, had been taken to hospital. He warned that casualties could rise.

The Taliban claimed the attack, which came just two days after the insurgents began a seventh round of talks with the US in Qatar as Washington eyes a breakthrough before Afghanistan's September presidential election.

Militant spokesman Zabiullah Mujahid released a statement saying the insurgents had targeted a defence ministry building in the area, which was quickly blocked off by Afghan forces and ambulances, with helicopter gunships seen overhead as firing continued.

Authorities have not confirmed the target. The heavily-secured neighbourhood is home to some military and government buildings, including one shared by Afghanistan's intelligence agency and defence ministry, as well as the Afghan Football Federation and Cricket Board.

"We were sitting inside the office when the world turned upside down on us," Zaher Usman, an employee at a branch of the culture ministry, which he said stands just 150 metres (yards) from the blast.

He said the blast appeared to have occurred near Gulbahar Tower, which contains a shopping mall and residential units and is next to a defence ministry building.

"When I opened my eyes, the office was filled with smoke and dust and everything was broken, my colleagues were screaming," Usman told AFP by telephone.

Brief lockdown

Shams Amini, a football federation spokesman, told AFP that the blast occurred near their HQ gates.

"Some of our colleagues are trapped inside, we have reports of some injuries. We don't know if the attackers have entered the building," he said.

Nearby Shamshad TV station, which was attacked in 2017, aired images of broken glass and damage to its offices.

"I was terrified," Shamshad anchor Hashmat Stanikzai told AFP, adding that they had been filming a live programme when the blast occurred. He said the station's staff were evacuated by security forces.

The explosion came as the US was set to begin a third day of negotiations with the militants in Doha. There was no immediate confirmation if they would go ahead after the blast.

The talks have so far centred on four issues -- counter-terrorism, the foreign troop presence, an intra-Afghan dialogue and a permanent ceasefire.

A potential deal would see the US agree to withdraw its troops after more than 17 years in Afghanistan, igniting deep concerns among huge swathes of Afghans who fear the militants will return to some semblance of power.

In return, the Taliban would guarantee the country would never again become a safe haven for violent extremist groups, as happened with Al-Qaeda before the September 11, 2001 attacks.