Fighting has flared across Myanmar since the February coup as people form "defence forces" to battle a brutal military crackdown on dissent, but clashes have largely been restricted to rural areas.

Acting on a tip-off, security forces raided a house in Mandalay's Chan Mya Tharsi township on Tuesday morning, the junta's information team said in a statement, and were met with small arms fire and grenades.

Two officers were killed during the raid, military sources told AFP, and at least ten were wounded.

Four "terrorists" were killed and eight arrested in possession of homemade mines, hand grenades and small arms, a junta spokesman said in a statement.

"We could hear artillery shooting even though our house is far from that place," a Mandalay resident told AFP.

Another four members of the self-defence group were killed when the car they were attempting to flee in crashed, the spokesman said, without providing details.

The United States' embassy in Yangon said on Twitter it was "tracking reports of ongoing fighting in Mandalay... We are disturbed by the military escalation and urgently call for a cessation of violence."

The mass uprising against the military putsch that toppled the government of Aung San Suu Kyi has been met with a brutal crackdown that has killed more than 870 civilians, according to a local monitoring group.

As well as the rise of local self-defence forces, analysts believe hundreds of anti-coup protesters from Myanmar's towns and cities have trekked into insurgent-held areas to receive military training.

But part-time fighters know the odds are stacked against them in any confrontation with Myanmar's military -- one of Southeast Asia's most battle-hardened and brutal.