Dozens of people were wounded with fatalities feared as a powerful car bomb rocked Kabul early on Monday and gunmen battled special forces in an area housing military and government buildings, officials said.

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 (1.2 miles) 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 area was quickly blocked off by Afghan forces and ambulances, with helicopter gunships seen overhead as firing continued.

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," said 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 government 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.

Pakistan strongly condemned the reported casualties caused by the "terrorist attack".

"Pakistan condemns terrorism in all its forms and manifestations. We offer our sympathies and condolences to the bereaved families," a statement issued by the Foreign Office said, adding that attacks such as today's are "detrimental to the cause of peace, security and stability in Afghanistan".

Brief lockdown

Police in the Afghan capital said they do not yet know the target.

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 but said it was not the target.

The nearby "Green Zone" diplomatic area was briefly put on lockdown, but later opened again.

No group immediately claimed responsibility for the attack but both the Taliban and the militant Islamic State group are active in Kabul.

The explosion came two days after the Taliban and the US began their seventh round of talks in Qatar as Washington eyes a breakthrough before Afghanistan's September presidential election.

The negotiations 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.