Ahmed Wali Karzai, the younger brother of the Afghan president and a hugely powerful if controversial figure in southern Afghanistan, was assassinated at home on Tuesday, officials said.

The killing of his chief local powerbroker will be a huge loss for President Hamid Karzai in Kandahar, the heartland of the Taliban insurgency, as NATO troops rush to start withdrawing combat troops after a decade of war.

Initial details were sketchy, with a family friend telling AFP on condition of anonymity that he was killed by a bodyguard while entertaining guests at home and an Afghan intelligence official saying he was shot dead by a guest.

"We can confirm he has been martyred," Kandahar provincial government spokesman Zalmay Ayubi told AFP, providing no further details.

A health official, also speaking on condition of anonymity because of the sensitivity of the information, said Wali Karzai had been shot dead.

"He was shot dead at his house by one of the visiting guests not by a bodyguard, at around 11:30 am (0700 GMT)," said an official at Afghanistan's intelligence agency, the National Directorate of Security.

The official said the gunman had himself been killed by other bodyguards.

The family friend said a number of Wali Karzai's guests were also killed in the gunfire, but there was no immediate confirmation of who or how many.

The assassination came just before the Afghan leader received French President Nicolas Sarkozy, on a surprise visit to Afghanistan where he announced that Paris would recall 1,000 soldiers by the end of next year.

Wali Karzai, head of Kandahar's provincial council, was for years a deeply controversial figure, dogged by allegations of unsavoury links to Afghanistan's lucrative opium trade and private security firms.

American documents leaked by Internet whistleblower WikiLeaks late last year painted him as a corrupt drugs baron, lifting the lid on Western thoughts long kept private on the president's younger half brother's tainted record.

Kandahar is a make-or-break battleground in the US-led fight to defeat the insurgency, where the United States has poured in thousands of extra troops to wrest the initiative from the Taliban and bolster the Afghan government.

Afghanistan is ranked one of the most corrupt countries in the world, where official graft undermines public support for the Western-backed government and is believed to help fuel support for the Taliban insurgency.

A US cable in 2009 said a meeting with Wali Karzai captured one of the "major challenges in Afghanistan: how to fight corruption and connect the people to their government, when the key government officials are themselves corrupt."

Wali Karzai, who ran his own private militia in the province, is reported to have said the plethora of independent security firms run by different men in the region should be brought under the control of one man.