Heavily armed Taliban fighters attacked Ghazni city in central Afghanistan early on Friday, shelling houses and business areas and gaining control of parts of the city centre.
The attack on a strategic city straddling the main route between the capital Kabul and southern Afghanistan demonstrated the Taliban's strength amid increased speculation about a possible ceasefire during the Eid Al Adha holiday this month.
Officials said clashes between government forces and the Taliban started overnight, forcing authorities to close the highway linking it to Kabul, 150 kilometres to the north-east.
"The Taliban are dropping missiles near residential and commercial areas. There has not been a single minute of silence for the last eight hours," said a senior government official in Ghazni.
A second government official said it was too dangerous for people to leave their homes and he had no immediate details on casualties.
"It is not possible to get out of our homes to help the injured or collect bodies," he said.
Taliban spokesman Zabihullah Mujahid said parts of the city had been seized by the Taliban and many people were killed.
The attack on Ghazni followed a similar assault on Farah in May, when insurgents came close to overrunning the city in western Afghanistan.
Taliban militants and insurgents belonging to the other groups have been active in Ghazni province, and Taliban fighters captured a district there and killed its governor in April.