MOGADISHU - Two bombs ripped into a hotel in the centre of the Somali capital on Sunday and security forces fought Islamist al Shabaab gunmen who stormed inside the building, police and witnesses said. At least 10 people were killed.

Al Shabaab, which has frequently launched attacks in Mogadishu in its bid to topple the current government, said it was behind the assault on the Sahafi hotel where government officials and lawmakers stay.

"Mujahideen (fighters) entered and took over Sahafi hotel where enemies lived," Sheikh Abdiasis Abu Musab, al Shabaab's military operations spokesman, said.

The incident mirrored tactics used before by al Shabaab, in which it detonates bombs to break through security at targets and then sends in fighters.

Major Ahmed Nur, a police officer, said that a car bomb rammed the entrance to the hotel and was followed by second blast, which a security guard said was a second vehicle bomb.

Police said at least 10 people were killed, including the hotel owner, officials, guards and civilians.

"We have also rescued many government officials by a ladder through the back wall," said Major Ismail Nur, another police officer, adding that a lawmaker and a former military commander were among those killed.

Police were still exchanging fire with attackers inside the hotel more than two hours after the morning assault began. One police officer said fighters had fired on them from the roof top.

African Union's AMISOM force, which has been leading a campaign with Somali troops against al Shabaab, were also at the scene, helping to clear the hotel from fighters.

A spokesman for AMISOM said the troops were "still mopping (up) floor by floor", saying there were four storeys.

The hotel lies near a busy area in Mogadishu known as K-4. Plumes of smoke rose above the capital on the Indian Ocean coast.

"We got phone calls from staff hiding in hotel rooms saying that there are several injured people in the hotel," police officer Nur said. "Some government officials are inside the hotel. The death toll may rise."

A witness saw wrecked cars and destroyed motorbikes in the area, as well as two dead civilians lying outside. At least three others were injured.