Kunduz: The Taliban Monday seized half of an Afghan provincial capital, sending panicked residents fleeing as the hardline Islamists for the first time breached a major city since being ousted from power in 2001.


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Marauding insurgents hoisted their flag over the main square of the northern city of Kunduz, freed prisoners from the local jail and set fire to the local intelligence agency headquarters, witnesses and officials said.


The Taliban`s incursion into Kunduz barely nine months after the NATO combat mission ended marks a major psychological blow to the country`s Western-trained security forces.


"Half the city has fallen into the hands of Taliban insurgents," Kunduz police spokesman Sayed Sarwar Hussaini told a news conference, adding local forces had not yet received promised reinforcements from Kabul.


Scores of bodies littered the streets after hours of heavy fighting, Afghan media reported citing local residents, many of whom were making a hasty exit from Kunduz.


The city was swarming with Taliban fighters who were racing police vehicles and had raised the flag of the Islamic Emirate of Afghanistan (the group`s official name) over the homes of government officials, according to an AFP reporter.


"Around 3:30pm the Taliban installed their flag in the main square of Kunduz city," a government official, who requested anonymity, told AFP.


He added that the local headquarters of the National Directorate of Security, the country`s main intelligence agency, had been set on fire, and prisoners had been released from the city jail.


"Only the police headquarters is now resisting," he said.


Saad Mukhtar, head of a 200-bed government hospital, said the Taliban had control of the building and were hunting for wounded Afghan troops.This was the group`s third attempt this year to breach the city, which coincides with the first anniversary of President Ashraf Ghani`s national unity government in power.


The Taliban`s ability to penetrate the city is a major setback for Afghan forces who have been battling the militants without the front-line help of NATO forces who ended their combat mission in December 2014.


The Islamist group has been largely absent from cities since being driven from power by the US and its allies, but has maintained often-brutal rule over swathes of the countryside.


A senior tribal elder in Kunduz, 150 miles (250 kilometres) north of Kabul, said the militia had control of one of the city`s districts, while a second elder added his house was now around 100 metres (yards) from their forward line.


Federal government officials had earlier issued strong denials that the Taliban had breached the city, insisting they were repelling the insurgents on the city`s outskirts.The Taliban have been waging a bloody insurgency since a US-led invasion booted them from power in late 2001, and have stepped up attacks during a summer offensive launched in late April against the Western-backed government in Kabul.


On Sunday 13 people were killed and 33 wounded at a volleyball match in the eastern province of Paktika.


The Taliban denied being behind the attack in Paktika, a volatile frontier region considered a stronghold of their allies the Haqqani network.


Meanwhile, Afghanistan`s thinly spread security forces are increasingly having to deal with the threat from the self-styled Islamic State group, which is looking to make inroads in the troubled country.


At the weekend, it launched coordinated attacks on police checkpoints in the eastern province of Nangarhar, killing at least three officers.


The two groups -- both with their blood-curdling brand of Islamic fundamentalism -- are seen as engaged in a contest for influence in Afghanistan.


But after years of costly involvement, Washington and its allies have tired of the blood and treasure they were expending in the country, and have pulled back from frontline combat.


Most NATO troops had left by the end of 2014, although a residual force of around 13,000 remains for training and counter-terrorism operations.


Peace overtures by the government of President Ghani over the summer ended in failure, as civilian casualties soared to a record high in the first half of 2015 according to a UN report.


It said 1,592 civilians were killed, a six percent fall over last year, while the number of injured jumped four percent to 3,329.