The explosion was heard at around 11:40 local time (07:10 GMT), ministry spokesperson Nasrat Rahimi said, BBC reported, adding that gunfire has also been heard.
There is yet no verified report on the cause of the blast or number of probable casualties.
Afghan security forces were engaged in a gunfight with the attackers, Rahimi added said.
No one has yet claimed responsibility for the attack which happened in a busy area near one of the city's most popular hotels, as well as the presidential palace.
MNA/PR