A suicide Shebab car bomber blasted open the gates of the police station in the central Somali town of Beledweyne today, before insurgent commandos stormed the compound shooting and killing, commanders and police said.
Bodies were reported to be strewn around the blast site, but it was not immediately possible to say how many had been killed.
The Al-Qaeda-linked Shebab, who boasted of killing several people, said that Djiboutian troops with the African Union force and Ethiopian soldiers were also based at the police compound.
"Several of our special mujahedeen commandos carried out the attack on the military base in Beledweyne... They have killed many of the enemy," local Shebab commander Sheikh Mohamed Abu Suleiman told AFP.
Shebab spokesman Abdulaziz Abu Musab, who said one attacker blew himself up in a car at the gate before gunmen entered the base, reported the insurgents had "killed mainly Somalis but also some Djiboutians", and called the attack a "victory".
The town has in recent months been hit by a series of bombs and shootings claimed by the Shebab.
Witnesses said the car rammed the gate of the police station before bursting into a huge ball of flames.
"The car hit the gate of the police station and exploded, then after the explosion men with machine guns stormed the building, there was lots of shooting," said Hassan Nur, who saw the attack.
"I can't say how many are dead, but I saw several bodies lying around the area where the car blew up."
Senior Beledweyne police commander Colonel Abdulkadir Ali said the "situation is now under control".
"The explosion was enormous and there are casualties," he added, without giving more details.
Last month a suicide bomber killed at least 15 people in an attack on a popular restaurant in the town, which lies close to the border with Ethiopia, and which is under the control of pro-government Somali forces.
The Shebab also said they carried out the restaurant bombing, saying they were targeting Ethiopian troops and soldiers from the AU mission stationed in the town.
Beledweyne, which lies some 300 kilometres (185 miles) north of Mogadishu, holds a strategic position commanding the road to the capital.
The Shebab have been driven out of fixed positions in Somalia's major towns, including Mogadishu and the southern port of Kismayo, by a UN-mandated African Union force of more than 17,000 men.
However the group still controls large swathes of southern Somalia and continues to launch brazen attacks including suicide bombings and commando attacks.
Many of the worst attacks have been in the heart of the capital, such as a car bomb earlier this month at a popular hotel that killed at least four people, including one of Somalia's top diplomats.
In September the group also claimed responsibility for a massacre at the upmarket Westgate shopping centre in the Kenyan capital Nairobi that left at least 67 dead.
The attack comes as the African Union force in Somalia awaits an important troop boost of over a quarter to 22,000 men, approved this month by the UN Security Council as part of efforts to step up offensive operations against the Shebab.
