The International Organisation for Migration said four of its workers were wounded, including an Italian woman badly burned by a grenade at its quarters for international workers. Police said at least five attackers also died.
The Taliban quickly claimed responsibility for the assault, the second major strike inside Kabul in a little more than a week.
The insurgents have unleashed a wave of bombings and assassinations around the country, testing Afghan security forces' ability to respond with less help from international forces who have begun a withdrawal that will see most foreign troops gone by the end of 2014.
The attackers stormed into the building with grenade launchers after blasting open the compound's gate with the car bomb, Salangi said. He said police were able to evacuate the guest house with none of the residents killed.
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Four hours after the initial car bomb blast, which shook much of the city, fighting was still going on in the upscale Shahr-i-Now neighborhood, home to several international groups' fortified compounds.
By late evening, security forces were able to enter the building and were searching room by room for the final attacker, said Latif Khan, director of the local police district.
"We are on the third floor. There are still two floors to clear," Khan said. "No one is shooting now, but we are not sure if the last gunman is dead or just hiding."
Dozens of Afghan police were rushed to the scene in trucks and took up positions around the area after the initial blast at about 4 pm, taking cover behind blast walls and running through a thick cloud of smoke from the bomb. At least one wounded officer was seen being helped away by his comrades.