At least 39 people have been killed and dozens more have been wounded in an attack on a crowded nightclub in Istanbul, Turkey's interior minister said.

The minister, Suleyman Soylu, added that police are hunting one "terrorist" after the attack that hit the nightspot in Ortakoy neighbourhood at around 1:15am on Sunday.

He said the gunman was believed to have carried out the assault alone.

Governor Vasip Sahin said the attacker, armed with a long-barreled weapon, killed a policeman and a civilian outside the Reina club before entering and firing on people partying inside.

"A terrorist with a long-range weapon ... brutally and savagely carried out this incident by firing bullets on innocent people who were there solely to celebrate the New Year and have fun," he said at the scene.

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Sixty-nine people were in hospital after the attack, Soylu said. Of the 21 dead identified so far, 15 were foreigners.

The Reina lies on the shore of the Bosphorus Strait and is one of Istanbul's best-known nightclubs, popular with locals and tourists alike.

Some survivors jumped into the waters of the Bosphorus to save themselves and were being rescued by police.

President Recep Tayyip Erdogan said the attack was staged to create chaos in Turkey.

"They are working to destroy our country's morale and create chaos by deliberately targeting our nation's peace and targeting civilians with these heinous attacks," Erdogan said in a statement on the presidency website.

2017 starts with an attack in #Istanbul. Our thoughts are with victims and their loved ones. We continue to work to prevent these tragedies — Federica Mogherini (@FedericaMog) January 1, 2017

At least 500 people were thought to have been in the nightclub when the attack happened.

Ortakoy is a cosmopolitan neighbourhood located under one of three bridges crossing the Bosphorus, and home to clubs, restaurants and art galleries.

There has been no claim of responsibility so far for the attack, but experts say the needle of suspicion points at the Islamic State of Iraq and the Levant (ISIL) group, which has repeatedly attacked civilians in Turkey in recent months.

Al Jazeera's Sinem Koseoglu, reporting from Istanbul, said security services believe the timing and target suggest ISIL involvement. Eight ISIL members had been detained, suspected of preparing a suicide attack on New Year's Eve, she said.

The Reina nightclub is not only frequented by partygoers but also used as a venue by businessmen and diplomats to conduct meetings, she added.

Koseoglu said those in the club reported seeing up to three attackers, carrying Kalashnikovs.

A witness quoted by the Hurriyet newspaper said she had seen two attackers.

"Two people were shooting with weapons," she said. "Suddenly, people started to run. My husband told me not to be afraid. He jumped on top of me. People ran over me. My man was shot in three places."

Multiple threats

The White House described the attack as "savagery" and said US intelligence services would help Turkish authorities investigate the attack.

Turkey, part of the US-led coalition against ISIL, faces multiple security threats, including fallout from the war in neighbouring Syria.

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It has seen repeated attacks and bombings blamed on ISIL, also known as ISIS, as well as on the Kurdish fighters of the PKK in recent months.

The PKK and its affiliates are known to target mostly members of Turkey's security forces rather than civilians.

The attack comes less than two weeks after the Russian ambassador to Turkey, Andrey Karlov, was assassinated while giving a speech at an art gallery in the capital Ankara.