Gunmen blasted their way into the British aid group's compound in the eastern city of Jalalabad, killing at least three people and wounding 24.
Save the Children, an AFP reporter at the scene and a security source said the attack was continuing in the early evening, hours after an official claimed it was over.
"Save the Children can confirm that the security incident affecting our office in Jalalabad, Afghanistan is still ongoing," a spokesperson said in a statement.
After blowing up a car outside the charity's compound in Jalalabad, the attackers used a rocket-propelled grenade to storm the complex, in a raid claimed by IS via its propaganda arm Amaq.
Also Read
Attaullah Khogyani, a spokesman for the Nangarhar provincial governor, said at least three people -- two guards and a civilian -- had been killed and 24 wounded. Earlier, he said the attackers were wearing military uniforms.
Up to 50 people including women were rescued from a basement where they had been hiding from attackers, Khogyani said in a statement.
"We ran for cover and I saw a gunman hitting the main gate with an RPG (rocket-propelled grenade) to enter the compound. I jumped out of the window," Amin said.
Afghan TV news channels showed a thick plume of black smoke rising above the compound and what appeared to be at least one vehicle on fire outside the office.
IS has intensified attacks in cities in recent months, targeting mosques and Afghan security forces as it expands beyond its stronghold in the east.
Today's assault comes days after Taliban gunmen stormed a luxury hotel in the Afghan capital and killed at least 22 people, mostly foreigners.
Insurgents armed with Kalashnikovs and suicide vests attacked the landmark Intercontinental Hotel, going from room to room searching for foreigners during the more than 12-hour ordeal.
"Attacks directed at civilians or aid organisations are clear violations of international humanitarian law and may amount to war crimes," the UN's mission in Afghanistan tweeted earlier.
The assault on Save the Children, which has operated in Afghanistan since 1976, is the latest violence to hit a foreign aid group in the country, which recorded the second highest number of attacks against aid workers in 2016.
The International Committee of the Red Cross announced in October it would "drastically" reduce its presence in Afghanistan after seven employees were killed in attacks last year.
Nangarhar, a restive province bordering Pakistan, is a stronghold for IS and also has a significant Taliban presence.
US and Afghan forces have been carrying out ground and air operations against IS fighters in the province.
While Afghan security forces are conducting most of the fighting against IS and Taliban militants, US troops operate alongside them in a training capacity and are frequently on the front lines.
Disclaimer: No Business Standard Journalist was involved in creation of this content