The Islamic State has a relatively small presence in Somalia compared to the Al-Qaeda-linked Al-Shabaab, but experts have warned of increasing activity from the group.

The attack in the Puntland region comes only days after the government announced preparations for a major force to combat the Islamic State group in the northern region.

The government said its security forces had repelled the morning assault "masterminded by the blood-sucking group of Daacish" that saw militants detonate a vehicle filled with explosives near the town of Dharjaale -- roughly 200 kilometres (124 miles) from the commercial port of Bossaso.

The men went on to target a house where witnesses said several officials, including a Puntland army commander and a member of the local parliament, were staying.

Resident Shuceyb Ahmed confirmed that foreign fighters in "military uniform" were among those killed in the clash.

"The security forces killed all the attackers in there, and none of them managed to escape," the government said in a statement, adding at least eight "foreign attackers" had died.

The statement did not detail if civilians or any of the Puntland forces were wounded or killed in the clash.

A United Nations counter-terrorism official noted earlier this year increased attacks by Islamic State affiliates in Mozambique, the Democratic Republic of Congo and Somalia.

*This story was edited by Ahram Online.