At least 25 people were killed in Wednesday's attack on a Sikh-Hindu temple in Kabul, an official said.

"Unfortunately 25 civilians were killed and eight wounded in today's attack," interior ministry spokesman Tariq Arian said in a statement. 

He added that one attacker had also been killed and 80 people rescued from the temple in the centre of the Afghan capital. 

The Islamic State group claimed responsibility for the attack.

Gunmen stormed the Sikh-Hindu temple in central Kabul and were locked in a battle with security forces.

The attack came as Afghanistan was facing myriad crises including a raging insurgency, political deadlock, a massive cut in US aid, a flailing peace process and rising coronavirus cases.

"At around 7:45 am (0315 GMT), a number of attackers entered a Hindu-Sikh temple," interior ministry spokesman Tariq Arian told AFP. "People are stuck inside the building and (security forces) are trying to rescue them."

The Islamic State group later claimed responsibility for the attack, according to the SITE intelligence group. The Taliban denied any involvement. 

"There are about 150 people inside the temple. Families are living there and they usually gather to offer prayers in the mornings," said Anarkali Kaur Honaryar, a Sikh member of the Afghan parliament.

"Some people inside the temple were hiding and their phones were off. I am very concerned."

Health ministry spokesman Wahidullah Mayar said 15 wounded people and one dead child had been brought to a local hospital. But it was feared the toll would rise much higher, as images posted online showed several bodies as well as terrified people who appeared to be Sikhs running from the scene.

IS has a history of targeting Afghan Sikhs and Hindus including a suicide bombing in Jalalabad in July 2018 that killed 19 people and wounded 21.

Around 1,000 Sikhs and Hindus are estimated to reside in what is an overwhelmingly Muslim nation.

Earlier this month, IS jihadists killed 32 people and wounded dozens more in an attack at a political gathering in Kabul.

IS, which follows a radical Sunni interpretation of Islam, first became active in Afghanistan in 2015.

In recent months the group has suffered mounting setbacks after being hunted by US and Afghan forces as well as Taliban offensives targeting their fighters, but it still retains the ability to launch major assaults on urban centres.

- Aid cut -

To add to Afghanistan's woes, Washington slashed the amount of aid to the country this week.

The decision came after US Secretary of State Mike Pompeo visited Kabul in a bid to resolve a standoff between President Ashraf Ghani and his rival Abdullah Abdullah, who also is proclaiming himself president following a contested election.

Pompeo, who lashed out at their "failure" to come to an agreement, said the US would immediately cut $1 billion and was prepared to pull another $1 billion in 2021, with further cuts possible after that.

The US and the Taliban signed a deal last month that was supposed to pave the way for talks between the Afghan leadership and the insurgents, but with Kabul unable to agree who is in government, the talks have stalled.

With a GDP of only about $20 billion, the cuts represent a devastating blow to Afghanistan's donor-dependent economy.

Meanwhile, coronavirus is continuing to spread across Afghanistan. Officially there are 74 confirmed cases and two deaths, but many observers fear the number is far higher. 

The impoverished country is testing few people, "social distancing" is an abstract concept for an illiterate population accustomed to crowding into mosques and large family gatherings, and thousands of people have returned from pilgrimages to coronavirus-hit Iran in recent weeks.