A suicide bomber blew up his explosives-laden vehicle late Monday night in Kabul's main city neighbourhood and gunfire followed, according to a government spokesman.
The attackers entered a building in the area, said Sediq Seddiqi, a spokesman for the Afghan Ministry of Interior, adding that Afghan police special forces are in the area and the gunfire has ceased.
The attack occurred after twin bombings early Monday near the Presidential Administrative Office in the Afghan capital killed at least 24 people and wounded 91.
The suicide bomber attacked shortly after 11 pm (1900 GMT) in a busy shopping area, where shops were open till late ahead of the Eid holidays.
The area came under gunfire attack after the explosion, and initial information showed that two attackers were in the area, Seddiqi said.
No information was available on possible casualties.
In addition to shops, there are several hotels in the area and several other possible targets for attackers, including an Interior Ministry complex and the headquarters of the Kabul Bank.
Last December eight people were killed and nine were wounded when a guesthouse in the Spanish Embassy compound was attacked.