New Zealand SAS troops in Kabul reportedly played a key role in ending this week's 20-hour gunfight that left 27 people dead, including 11 insurgents.
This appears to contradict the Government's line that the SAS soldiers provided operational advice, but did not directly engage with the insurgents, who were believed to be from the Pakistan-based Haqqani network.
The attack began on Tuesday after the militants - disguised in burqas - took control of a half-finished building, having spent the past few weeks smuggling ammunition, grenades and weapons past police checkpoints and into the building.
The building was strategically chosen despite its location in a high security area, because it overlooked the Nato headquarters, the US Embassy and other high-profile targets.
As three suicide bombers struck in other parts of the city, dozens of explosions brought the city to a standstill as first Nato and then Afghan helicopters fired on the building from the skies.
The London Independent's Kabul correspondent Julius Cavendish reported that insurgents held off police for eight hours, and were only quelled when the SAS, along with the Afghan Crisis Response Unit, seized control of the 13-storey building floor by floor.
"A team of New Zealand special forces and an Afghan counter-terrorism squad had to fight their way through the maze of lift shafts and annexes on each floor."
A report in the London Telegraph also suggested the SAS were engaging with the insurgents. Both Afghan and Nato soldiers "could be seen taking positions near the top of the open concrete block, which was pocked with hundreds of bulletholes".
Defence Minister Wayne Mapp confirmed the Afghan Crisis Response Unit (CRU) and SAS took control of the building.
"My understanding is that the CRU did that [with] the SAS providing advice ... supporting them, giving them operational advice so they can undertake operations.
"They are mentors for them so they are there in a supportive role, but they are not directly engaged."
He said he had no advice the SAS had fired shots.
A Defence Force source said the SAS suffered no injuries.
The Haqqani fighters were also responsible for last month's attack on the British Council, which claimed the life of SAS soldier Corporal Douglas Grant.
US diplomat Ryan Crocker has downplayed the latest raid as nothing serious, but the sophisticated planning of the attack and the length it lasted are seen as signs that local forces are not ready to stand on their own feet.
Dr Mapp did not want to comment on Afghan police capability, but said the SAS's work with the CRU was paying dividends.
"You can actually see progress by the Afghan authorities over a range of incidents over the last few months. The [CRU's] capability is clearly improving."
He said it was still the Government's intention to bring home the SAS soldiers when their rotation finishes in March.By Derek Cheng Email Derek