Initial reports said two gunmen had stormed the building in Arbil in the early morning, shooting and wounding a policeman.

But as the day unfolded, the toll rose to one employee killed and several members of the security forces wounded as Kurdish security forces exchanged fire with the attackers, officials said.

"An employee was killed in the assault on the provincial headquarters," Arbil governor Nawzad Hadi told a news conference.

The Kurdish autonomous region's deputy police chief Farhad Mohammed said "several members of the security forces were wounded", but did not give a specific toll.

Mohammed said the three gunmen had been "neutralised" after a four-hour exchange of fire with Kurdish security forces.

He described the assault as a "terrorist" attack but stopped short of blaming any particular group.

The anti-terrorism squad in Kurdistan said in a statement that two of the gunmen were aged 16 and the third was 18, all of them from Arbil.

An AFP correspondent near the building said he heard heavy gunfire and a loud explosion, probably from a hand grenade.

Deputy governor Taher Abdullah had earlier said that Kurdish security forces known as the Asayish had set up a security cordon and were searching the building for the assailants.

There was no immediate claim of responsibility for the attack in the usually secure Kurdish regional capital, and the assailants' motives were unclear.

The Islamic State jihadist group claimed a deadly attack on the interior ministry in Arbil in 2015.

The previous year the group was blamed for a suicide bombing that killed at least four people outside the Arbil Provincial Council Building.

Kurdish peshmerga fighters took part in the battle against IS after it seized nearly a third of Iraq in a lightning 2014 offensive.

Baghdad declared victory over the group in December but the jihadists still hold pockets of territory and continue to carry out deadly attacks.