A fierce gun battle broke out close to the US embassy in Afghanistan's capital Kabul Tuesday afternoon, an official said, adding that four blasts were also heard.

"The incident happened in Char Rahi Abdul Haq area which is close to the US embassy and NATO-led ISAF headquarters," the official told Xinhua requesting anonymity.

Police have cordoned off the area.

The attackers have occupied a tall building and are apparently targeting the US embassy.

Security forces are firing back at the attackers.

The Taliban has claimed responsibility for this attack.

Initial reports suggest the involvement of at least four suicide bombers, with one reportedly detonating a suicide vest in a taxi.

Apart from housing the US and other foreign embassies, and NATO's Afghan headquarters, the Abdul Haq Square is home to several government buildings and the presidential palace, the report said.

The attack comes weeks after suicide attackers stormed the city's British Council office, killing 12 people.