Four Indians were among 14 people killed when gunmen stormed a downtown Kabul guesthouse, trapping dozens of people attending a concert and triggering an hours-long standoff with Afghan security forces, officials said Thursday.

The Taliban claimed responsibility for the overnight siege on the Park Palace, which was about to host a concert by a well-known Afghan singer.

"The attack was planned carefully to target the party in which important people and Americans were attending," the terrorists said in a statement.

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The assault, which lasted around seven hours and triggered explosions and sporadic bursts of gunfire, comes as Afghan forces face their first fighting season against the insurgents without the full support of US-led foreign combat troops.

"Fifty-four people were rescued by security forces," Kabul police chief Abdul Rahman Rahimi said after a large number of armed personnel swooped on the guesthouse, which is in an up-market district and popular with international aid agency workers.

Rahimi did not give a breakdown of the nationalities of those killed but the US embassy confirmed one American fatality.

"Our thoughts are with the families of the victims at this time. Out of respect for the families of those killed, we have no further information at this time," US embassy spokeswoman Monica Cummings said.

Four Indians were also killed, while another was missing, an Indian foreign ministry official said in New Delhi.

Kabul deputy police chief Sayed Gul Agha Rohani said the siege ended when Afghan security forces killed three assailants, but Rahimi gave a conflicting number of attackers.

"So far we have identified one attacker, but we are looking to see if there were more. We are trying to find out the circumstances in which the attack took place. We need more investigation," Rahimi said.

Shots, screaming

The Park Palace was due to host a concert by classical singer Altaf Hussain, with several VIPs invited, when the gunfire started, a guesthouse employee said.

The employee, who did not wish to be named, said he barricaded himself in a room in the building when the shootout began and heard several people screaming in the corridors as gunshots rang out.

He later managed to flee the guesthouse and said he saw at least five blood-covered bodies lying near the entrance.

Rahimi, who was at the scene of the ongoing attack, had earlier said security forces faced heavy gunfire from the assailants.

Police could be seen surrounding the guesthouse on Thursday morning, blocking access to the building.

Inside, doors were smashed along with tables and windows, while blood stained the floors, according to the employee. Other tables prepared for the concert in the front yard still had refreshments laid out.

The attack comes a day after a visit to Kabul by Pakistani Prime Minister Nawaz Sharif, who assured Afghanistan of Islamabad's full support in its battle against the Taliban, saying "the enemies of Afghanistan cannot be the friends of Pakistan".

His unusually strong remarks are the latest sign of a thaw in the once-frosty relationship between the two countries. Afghan officials have frequently accused longtime nemesis Pakistan of harbouring and nurturing Taliban insurgents.

But Afghan President Ashraf Ghani has actively courted Pakistan since coming to power in what observers say is a calculated gambit to pressure the insurgents to come to the negotiating table.

Taliban insurgents, who have waged a 13-year war to topple the US-backed government, launched their spring offensive across Afghanistan late last month, stepping up attacks on government and foreign targets.

The terrorists have staged a string of attacks on compounds, restaurants and guesthouses frequented by foreigners, including two separate assaults in Kabul last November, one of which left a South African man and his two teenage children dead.

They also launched a major attack on a compound of the International Organization for Migration in 2013.

Their targets last year included the capital's most prestigious hotel, the Serena. In March 2014 four gunmen evaded security checks and opened fire there, leaving nine people dead including AFP reporter Sardar Ahmad, his wife and two of their children.

Afghan forces are now solely responsible for security in the volatile country, after NATO's combat mission formally ended in December with a small follow-up force staying on to train and support local personnel.