PHOTO: AFP
"An unknown number of armed men have attacked what at this stage we believe is a guest house in Wazir Akbar Khan district," says Kabul police spokesperson Ebadullah Karimi.
"They are using hand grenades and explosions can be heard. Security forces are at the scene trying to contain the attack," he added.
The guest house is believed to be the Heetal Hotel, owned by the family of Foreign Minister Salahuddin Rabbani, says an Afghan security official on condition of anonymity.
The hotel was damaged in 2009 when a suicide bomber blew himself up outside the gate, killing eight people and wounding another 40.
Tuesday's attack began around 11 pm local time (1830 GMT). A reporter near the scene heard the loud crackle of gunfire and more than a dozen rounds of explosions from the area in the space of an hour.
Kabul police chief Abdul Rahman Rahimi said security officials were trying to confirm the target of the assault in Wazir Akbar Khan, home to several foreign embassies and diplomatic compounds which has been hit by Taliban attacks in the past.
No group immediately claimed responsibility for Tuesday's assault, which comes as the Taliban intensify their annual spring-summer offensive.
The insurgents, waging a 13-year war against the US-backed Afghan government, have stepped up attacks on government and foreign targets despite Kabul's repeated overtures to reopen peace talks.
Taliban militants have launched a series of attacks in the capital and around the country as NATO forces have pulled back from the frontlines.
A blast triggered by a Taliban car bomber ripped through the parking lot of the justice ministry in Kabul on May 19, killing four people and wounding dozens of others.
Also this month 14 people -- mostly foreigners -- were killed in a Taliban attack on a guesthouse in the capital that trapped dozens attending a concert.
Official efforts to bring the Taliban to the negotiating table have so far borne little fruit.
The surge in attacks has taken a heavy toll on civilians, according to the United Nations Assistance Mission to Afghanistan. In the first four months of 2015, civilian casualties jumped 16 percent from the same period last year, it said.
The Afghan government has drawn public criticism for failing to end insurgent attacks, which critics blame on political infighting and a lengthy delay in finalizing a cabinet.
President Ashraf Ghani last Thursday nominated Mohammad Masoom Stanekzai, a top official in the government body overseeing the country's peace process, for the crucial position of defence minister.
The post had been left vacant for months due to disagreements between Ghani and his chief executive officer and former presidential election rival, Abdullah Abdullah.
Public criticism over the failure to appoint a defence minister has been especially fierce.
Afghan forces are now solely responsible for security after NATO's combat mission formally ended in December, with a small follow-up force staying on to train and support local personnel.
Earlier this month NATO formally announced plans to retain a small military presence in Afghanistan after 2016 to help strengthen local security forces.
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