Taliban gunmen armed with suicide bombs and heavy weaponry on Tuesday launched coordinated attacks in Kabul, targeting NATO's headquarters, the US embassy and the Afghan intelligence agency.

Gunfire and blasts engulfed what is usually the most heavily protected part of the Afghan capital.

The Taliban insurgency is now at its deadliest since US-led troops ousted the Islamists' regime after the 9/11 attacks 10 years ago.

The attacks were the latest sign that security has drastically deteriorated in Kabul, where insurgents have staged increasingly brazen commando-style raids on Western targets, such as on the British Council two weeks ago.

AFP reporters first heard a string of loud blasts shortly after 1:30 pm (0900 GMT) close to NATO headquarters and the adjoining US embassy.

Afghan police and soldiers attempting to approach the Abdul Haq roundabout about half a kilometre from the NATO base retreated under a volley of mortar rounds, gunfire and explosions, an AFP reporter said.

A Western military official confirmed NATO's International Security Assistance Force (ISAF) headquarters was one of the targets under attack.

"ISAF HQ is under attack at the moment," the source said, as terrified nearby residents and shopkeepers described how they dived for cover to save themselves.

But a spokesman for the US-led military mission, which is working to prop up an Afghan government increasingly seen as corrupt, confirmed only "an ongoing attack in the centre of Kabul."

The US embassy could not confirm that its compound was under attack but said staff had been ordered to take cover.

A Taliban spokesman told AFP by text message that the targets were ISAF headquarters, the US embassy and Afghanistan's intelligence agency, the National Directorate of Security (NDS) and other "sensitive government places."

If confirmed, the simultaneous attacks would be the Taliban's most ambitious commando-style operation to date in their fight to evict the Kabul government and defeat tens of thousands of Western troops.

Afghan police said that among the attackers were up to five who were hunkered down in a tall building under construction, exchanging fire with security forces from several floors with two ISAF helicopters flying overhead.

An Afghan army base is nearby, as is a Marriott hotel building site, a witness added.

"There are four or five people, fighting is under way. They're in the building. They have mortars, rockets and guns," said Kabul criminal investigations police chief, Mohammad Zahir.

Police had earlier confirmed a gunfight near the embassy, one of the largest American diplomatic missions in the world and one of the most heavily protected compounds in Afghanistan, home to hundreds of diplomats.

"Today at one o'clock at Kabul's Abdul Haq roundabout a massive suicide attack on local and foreign intelligence facilities is ongoing," wrote Taliban spokesman, Zabiullah Mujahid, in a text message to AFP.

The ISAF headquarters in Kabul oversees the operations of the bulk of the estimated 140,000 foreign troops fighting the Taliban in Afghanistan.

Residents told how they were forced to run for cover when a series of explosions shattered the early afternoon quiet.

"I was sitting in my shop when suddenly I heard an explosion and then another one. Then there was gunfire," said Abdulbaqi, a local shopkeeper near the Abdul Haq roundabout. "People on the streets started running, I had to leave my shop to get to safety," he added.

Officially Kabul is under the control of Afghan security forces, along with most of its surrounding province and six other parts of the country handed over by NATO-led troops in July as part of a staggered, timetabled withdrawal.

The insurgency, which largely relies on roadside bombs and suicide attacks, has reached its deadliest phase over the past two years.

Last week an American engineer was found murdered in mysterious circumstances in Kabul, a few days before the 10-year anniversary of the 9/11 attacks that triggered the long war in Afghanistan.

On Saturday, a massive truck bombing at a NATO base in central Afghanistan killed two people, wounded 77 American troops and about 25 Afghans.

The US military blamed the attack on the Al-Qaeda-linked Haqqani network, whose leadership is based in neighbouring Pakistan and enjoys the protection of Pakistani intelligence agents.