The Karen National Union (KNU) has been a vocal opponent of the military coup last year, and has provided shelter to dissidents working to oust the junta.

Its fighters, along with anti-coup "People's Defence Forces" have clashed sporadically with the military along the Thai border, sending thousands fleeing across the frontier for safety.

Friday's fighting began at 7 am (0100 GMT) in Kawkareik, which sits on the road to a major border crossing with Thailand, a resident who requested anonymity told AFP.

The fighting was ongoing, they said, adding it appeared "armed groups" were trying to attack government offices.

"We are hearing heavy weapon shelling," they said, adding that three civilians were killed, and at least 15 were sent to hospital.

A KNU spokesman said its fighters were battling junta troops at various locations around the town.

The military called in multiple air strikes to support its troops on the ground, he said.

Both sides suffered casualties, he added, without providing details.

"We are hiding in the basement," a resident of the town told AFP.

"Just in front of my eyes, I saw a vendor killed in an explosion."

Other injured people were taken to hospital, they said.

A resident of a nearby town told AFP they had heard repeated artillery fire.

"About four jet fighters have flown across the sky many times," they said, requesting anonymity.

"We are frightened. Some people are leaving the town for safety."

Local media reported KNU fighters that many buildings were damaged by air and artillery strikes.

The junta said ethnic rebels and PDF fighters had attacked the town with "heavy artillery fire on residential areas, civil servants quarters and government offices" from early morning.

It said civilians were wounded and that its troops would "perform counter-terrorism action," without giving details.

Myanmar has more than 20 ethnic rebel groups, many of which hold territory in the country's border regions.

Following the coup that ousted Aung San Suu Kyi's civilian government in February 2021, dozens of PDF groups have also sprung up to fight the junta.

PDF fighters have conducted operations alongside troops from the KNU.

In June, Thailand scrambled fighter jets after a Myanmar warplane briefly breached its airspace during an operation against anti-coup fighters.