NATO attack helicopters circled over an unfinished building in the centre of Kabul early on Wednesday in an operation to flush out Taliban fighters, more than 15 hours after the insurgents launched their biggest assault on the Afghan capital.
It was not known how many fighters were still holed up in the high-rise building near Kabul's diplomatic district from where they fired rockets at heavily-fortified US embassy and NATO headquarters.
"Forces are still working on clearing operations," a spokesman of the NATO-led International Security Assistance Force said, in what is turning out to be the longest sustained attack on Kabul since the US-led invasion a decade ago.
A source in the office of the Kabul police said fighting began again early on Wednesday, but he had no more information.
A Taliban spokesman in a text message to Reuters said the group's fighters were well and fighting foreign forces.
A squad of about five insurgents took over the shopping centre under construction on the outskirts of Kabul's diplomatic district on Tuesday, armed with rocket-propelled grenade launchers, AK-47 assault rifles and suicide vests.
Explosions were interspersed with gunfire all afternoon and several rockets landed in the upmarket Wazir Akbar Khan district, near the British and other embassies. One hit a school bus but it appeared to have been empty at the time.
The gun battle around Abdul Haq square went on into the early evening, with three attackers killed and one or two still at large nearly eight hours after the assault began, the Interior Ministry said.
The insurgents also launched attacks in three other areas of the capital, in the biggest challenge to foreign forces as they prepare to hand over security responsibilities to Afghan forces across the country by 2014.
A Senate panel on Tuesday approved a $1.6 billion cut in projected US funding for Afghan security forces, part of a significant reduction in outlays for training and equipping Afghan army and police expected in the coming years.
At least 9 people were killed and 23 wounded in the four attacks, and the ability of the Taliban to penetrate Kabul's vaunted "Ring of Steel" was a clear show of strength ahead of the handover.
"The scale of today's attack is unprecedented," said Andrew Exum, fellow at the Center for a New American Security.
"There was almost certainly either a break-down in security among the Afghans with responsibility for Kabul or an intelligence failure."
The US and British embassies and the NATO-led coalition said all their employees were safe.
Violence is at its worst since US-backed Afghan forces toppled the Taliban government in late 2001, with high levels of foreign troop deaths and record civilian casualties.
The assault was the second big attack in the city in less than a month after suicide bombers targeted the British Council headquarters in mid-August, killing nine people.
In late June, insurgents launched an assault on a hotel in the capital frequented by Westerners, killing at least 10. But Tuesday's attack was even more ambitious.