Gunfire rang out on Tuesday from a lawless village in southern Albania as hundreds more police officers arrived to battle well-armed cannabis growers who were trying to thwart a government crackdown.

By midday, about 800 police officers had surrounded the village of Lazarat after shooting overnight wounded a special forces police officer.

With local television broadcasting the events live, police and the interior ministry urged the village's 5,000 residents to stay indoors and warned others to stay away from the area, 230 km (140 miles) south of the capital, Tirana.

On Monday, about 500 police officers raided Lazarat, where 30 suspected cannabis growers opened fire with rocket-propelled grenades, heavy mortars and machine guns. After many of the growers fled, police say they destroyed 11,000 cannabis plants and found cannabis in barrels and sacks, but they could not enter the whole village.

Albania is a major cannabis-producing country in Europe and a transit point for other drugs coming in from Asia and Latin America to Europe. Gangs based in Lazarat are believed to produce about 900 metric tonnes of cannabis a year, worth about €4.5bn (£3.6bn) – just under half of the small Balkan country's GDP, according to the interior ministry.

Over the past few weeks, Albanian authorities have launched a nationwide operation to uproot the cannabis plantations.

Special forces police officers took up positions on Tuesday around the village, taking cover from the gunfire but holding back from entering Lazarat. Police said most of the shooting was coming from two houses that apparently had stockpiles of weapons.

"We are afraid that if we enter (the village) and respond to the shooting, we may cause casualties," a special forces police officer dressed in camouflage and wearing a bulletproof vest told an Associated Press photographer at the scene. He spoke on condition of anonymity because he was not officially authorised to speak to the media. "Moreover, (they) have all the weapons and equipment we have," he said.

Authorities said six men were arrested on suspicion of participating in an earlier shoot-out and of attacking and robbing a television news crew.

Police chief Artan Didi told reporters in Tirana that police were targeting a "very well-structured and organised criminal group that is keeping the village in its claws".

Albania, a small mountainous country on the Adriatic coast opposite Italy, has just over 3 million people. It was for decades Europe's most isolated country until a student uprising toppled the communist regime in 1990 and a number of Albanians emigrated to Greece, Italy and other western countries.

Another uprising in 1997 led to the extensive looting of military installations, flooding Albania with weaponry, most of which is still unaccounted for.