KABUL (REUTERS) - Taleban gunmen stormed a Kabul guesthouse used by a US-based aid group on Friday and were holding at least four foreigners hostage, in an attack which comes eight days before Afghanistan holds a presidential election.

Kabul is already on high alert and people across the country are on edge ahead of the April 5 vote, which the Taleban have denounced as a Western-backed sham and vowed to disrupt.

A Reuters witness saw about 20 people who appeared to be non-Afghans being evacuated from the guesthouse in an upmarket residential area of Kabul, many looking frightened and shocked.

A gun battle erupted after a Taleban suicide bomber blew himself up outside the building and insurgents forced their way in. Heavy gunfire resonated in the area for hours after the initial explosion.

"The four foreigners, who are trapped inside the building, are in contact with us and they are alive and fine," Qadam Shah Shaheem, Commander of 111 Military Corps Kabul, told Reuters.

"Only two of our forces got minor injuries. One or two suicide bombers are still fighting." Kabul police chief Mohammad Zahir said three US citizens, a Peruvian, a Malaysian and one African were still inside, but the country manager of an organisation using the guesthouse said only four people were trapped.

"I can confirm it was attacked and that there are only four people (inside)," said Mr Hajji Mohammad Sharif Osmani, country manager of Roots of Peace, a US-based group involved in demining and other projects in Afghanistan.

"The rest of the guys are outside."

The Taleban have ordered their fighters to go all out to disrupt the election and threatened to kill anyone who takes part.

Violence has spiralled in Afghanistan in recent weeks, with Taleban suicide bombers and gunmen attacking an election commission office in Kabul on Tuesday.

Last week, nine people including an AFP journalist and an election observer were killed in an attack on a highly fortified hotel in Kabul.

A senior police official said one attacker in Friday's raid was still resisting, with 18 foreigners, including children, having been evacuated and taken to a safe house.

Deputy interior minister, General Ayoub Salangi, told Reuters that at least one Australian citizen was among those rescued, but the nationalities of the others were not clear.

A senior police official said the target appeared to be a USAID-funded Afghan non-governmental organisation.

The Taleban immediately claimed responsibility, saying in a statement the target was a foreign guesthouse and a church.

Reuters television footage showed Afghan forces sealing off the street in the south of the capital and military convoys rushing to secure the area.

The nation of 30 million is holding an election to choose a successor to outgoing President Hamid Karzai.

It will be a major test for foreign donors hesitant about bankrolling the government after the bulk of Nato troops stationed in Afghanistan withdraw this year.