Al-Shabab terrorists attacked a hotel in the Somali capital Mogadishu in a hail of gunfire and explosions on Friday, with casualties reported, security sources and witnesses said.

The assault on the Hayat Hotel triggered a fierce gunfight between security forces and gunmen from the terrorist group who are still holed up inside the building, security official Abdukadir Hassan told Agence France-Presse (AFP).

"A huge blast went off a few minutes before the gunmen forced their way into the hotel," Hassan said.

"We don't have the details so far but there are casualties, and the security forces are now engaging with the enemy who are holed up inside the building," he added.

Witnesses said a second blast occurred outside the hotel a few minutes after the first, inflicting casualties on rescuers and members of the security forces and civilians who rushed to the scene after the first explosion.

"The area is cordoned off now and there is an exchange of gunfire between the security forces and the gunmen," one witness said.

The al-Qaida-linked terrorist group, which has been waging a deadly insurgency against Somalia's central government for more than a decade, claimed responsibility for the attack.

"A group of al-Shabab attackers forcibly entered Hotel Hayat in Mogadishu, the fighters are carrying out random shooting inside the hotel," the group said in a brief statement on a pro-Shabab website.