At least four people were killed in an ongoing attack by Al-Shabaab militants who laid siege to a popular hotel in Somalia's capital Mogadishu overnight, a security agency official told AFP on Monday.

Sporadic gunfire and explosions could still be heard after dawn around the Villa Rose, which is located near the presidential palace in a heavily guarded area of Mogadishu and frequented by lawmakers and public officials.

"The terrorist gunmen are trapped inside a room in the building and the security forces are about to end the siege very soon... so far we have confirmed the death of four people," security official Mohamed Dahir said.

"Several other people were wounded including government officials," he added.

Witnesses described two massive explosions followed by gunfire that sent people fleeing the scene in Bondhere district. The hotel is just a few blocks from the office of Somalia's President Hassan Sheikh Mohamud.

All routes leading to the hotel have been cordoned off by security forces, according to witnesses.

Al-Shabaab, a militant group affiliated with Al-Qaeda that has been trying to overthrow Somalia's central government for 15 years, claimed responsibility for the attack.

The militants have intensified attacks against civilian and military targets as Somalia's recently-elected government has pursued a policy of "all-out war" against the Islamists.