Islamic State carried out the attacks in the Indonesian capital of Jakarta earlier on Thursday (local time), a news agency allied to the group reported.
"Islamic State fighters carried out an armed attack this morning targeting foreign nationals and the security forces charged with protecting them in the Indonesian capital," Aamaaq news agency said on its Telegram channel.
Jakarta is on high alert tonight after the attack, which killed at least seven people.
As many as seven explosions were heard in the city followed by heavy gunfire. Indonesian police say five of the suspects are now dead and they have "taken control" of the area, the Associated Press reports.
Indonesian President Joko Widodo has condemned the "act of terror" and urged citizens not to be cowed.
"The state, the nation and the people, they, we, can't be afraid, can't be defeated by this act of terror," he said. "I hope the people stay calm because it's all under control."
The president said he had co-ordinated with police on the manhunt for the perpetrators.
"We all grieve for the victims of this incident; we all condemn this act that has disturbed the public security."
The president was to cut short his visit to Cirebon, West Java on Thursday (local time), and return to the capital.
As many as seven explosions were reported to have rattled the city's central business district, including one outside the United Nations building followed by a "serious exchange of fire". Other explosions are understood to have been inside a Starbucks café, at a police traffic centre, a shopping mall, and outside the presidential palace.
Gunfire broke out when police swarmed areas across the city, with reports that at least one attacker was on the run.
One witness reports seeing two people on a motorbike with a backpack outside the police station, who allegedly threw a bomb, while other witnesses have described seeing bodies on the ground.
A foreigner and a police officer are among the dead. It's not yet known how many people were injured.
It's believed it was a coordinated attack and that a suicide bomber was responsible for at least one of the attacks.
UN regional representative Jeremy Douglas, who is in Jakarta, had been livetweeting the event, saying he'd heard six bombings and gunfire.
New Zealand's Ministry of Foreign Affairs and Trade says there are currently 76 registered New Zealanders in Jakarta, but says it hasn't heard of anyone being caught up in the explosions.
Indonesia has been on edge in recent weeks over the threat of Islamist militants, with today's attack only adding to the fear.
3 News / AAP / Reuters