New Zealand SAS troops fired from a Black Hawk Helicopter to bring down Taleban insurgents who were taking "potshots" at civilians from the roof of an Afghanistan hotel, reports say.
At least six suicide bombers stormed the five-storey Inter-Continental hotel in Kabul about 9pm local time (5am NZ time).
Once inside, they went from room to room, attacking the residents, before taking over the roof of the building.
At least 10 Afghan civilians were killed in the battle, which ended when NATO and Afghan forces attacked the militants, killing them all.
Two New Zealand soldiers received "moderate" injuries and were last night recovering in a NATO hospital.
Guardian Kabul correspondent Jon Boone today told Radio New Zealand a unit of New Zealand SAS soldiers had been operating out of a Black Hawk helicopter above the hotel to counter the attacks.
Three insurgents were camped on the roof, attacking civilians and nearby buildings, he said.
"They were taking potshots at the roof... Also, we think, firing rocket propelled grenades into houses including the compound which belongs to one of Afghanistan's vice-presidents."
The two New Zealand soldiers who received injuries were from another unit charged with "mopping up" the attack, Mr Boone said.
It was thought they had been wounded by grenades left in a hotel room, he said.
He reported it was likely the troops would recover in Afghanistan and resume their duties there.
Defence Minister Wayne Mapp told Radio New Zealand the two SAS soldiers' injuries were due to "blasts and fragmentation".
"I've been advised that they are not life threatening. They are being currently assessed."
Dr Mapp would not diverge exactly how many Kiwis were involved in the operation, but said it was a "smallish number".
He said the conflict took several hours to resolve, with the Afghan Police Crisis Response Unit leading the attack but it "proved to be necessary [for the SAS] to take an active role".
"The CRU, the Afghan police, are always intended to lead the operations. It is obviously also true that our special forces are much more highly trained at this point in time than the CRU."
Prime Minister John Key last night the New Zealand SAS played a "crucial" role in thwarting the terrorist attack.
He said a "handful" of troops - fewer than a dozen, he thought - went to the raid with the Afghani Crisis Response Unit in a mentoring role to observe.
SAS forces are in Kabul to train local forces with a view to handing back security responsibilities soon.
"The incident obviously escalated," the Prime Minister said.
"There was a need for the New Zealanders to go into the building ... They played a very crucial part in making sure the building was safe."
The New Zealanders came under small-arms fire and explosions as a Nato helicopter with a sniper team fought the insurgents on the roof.
Photo believed to be of Kiwis
Last night, the AFP news agency distributed photographs of what it said were international forces involved in the battle.
The Times of London said they were possibly New Zealand soldiers. It also published a photograph of a helicopter near the hotel. It was a UH-60 Black Hawk, which the newspaper said was carrying New Zealand special forces.
Mr Key said that having spoken to the Chief of Defence Force, Lieutenant General Rhys Jones, he believed the New Zealanders' involvement had made a difference to the raid outcome.
Speaking in India, where he is on a state visit, the PM said the Defence Force believed it was not in its best interests to reveal details of the men's injuries. But the force described them as moderate.
The families of the soldiers have been notified.
Willie Apiata VC not involved
The attack came one night before the start of a conference on transferring civil and military responsibility from foreign forces to Afghans.
A week ago, United States President Barack Obama announced plans for the withdrawal of 10,000 American troops from Afghanistan by the end of this year, and another 23,000 by the end of next year.
Reports last night suggested security checkpoints on the way to the hotel were destroyed by suicide bombs, and that the attackers were wearing Afghan police or army uniforms.
There were reports that one suicide bomber hid in a room of the hotel overnight before detonating his device.
Witnesses heard at least seven blasts as well as gunfire during the attack on the hotel, one of two used by foreigners and government officials.
Taleban spokesman Zabihullah Mujahid said several fighters from his group had attacked the hotel and inflicted heavy casualties.
Mr Key did not know if the SAS troops killed any of the insurgents.
But he said General Jones made a point of saying that from what he knew, the Afghan Crisis Response Unit had done a very good job.
"They've dramatically improved in terms of their skills."
Mr Key said Victoria Cross-decorated SAS soldier Willie Apiata was not involved in the battle.
The Prime Minister said he had had dinner with Corporal Apiata last week.
The third SAS deployment to Afghanistan since 2001 was to have ended in March. It was extended for one more year, but the number of troops was cut from 70 to about 35.
The Defence Force kept Mr Key in the dark about the engagement of the SAS and the nature of the injuries until well after the incident was over.
The PM first spoke to reporters at 12.30pm (NZ time) yesterday, seven hours after the SAS had begun engaging with the Taleban terrorists and two hours after the raid ended.
At that time, he had not been told any New Zealanders had taken part. "My guess is if they had been involved, I would have been advised by now, and I certainly haven't been advised."
Three hours later, the Government received its first indication the Kiwis were involved. Mr Key said he did not expect to be advised every time the SAS was on a mission.
- Additional reporting: Claire Trevett in Mumbai, Agencies