The Taliban claimed responsibility for the attack in a densely crowded neighbourhood, which sent clouds of acrid smoke billowing into the sky and rattled windows several kilometres away.
The brazen assault near the defence ministry marks the first major Taliban attack in the Afghan capital since the insurgents announced the start of this year's fighting season.
"One of the suicide attackers blew up an explosives-laden truck in a public parking lot next to a government building," Kabul police chief Abdul Rahman Rahimi told reporters.
Rahimi said the attack also left 183 people wounded but the health ministry said that figure was almost 330, with many battling for their lives in hospital.
The gunfight appeared to die down several hours after the powerful explosion, but some security officials expressed concern that other bombers may still be on the loose.
The interior ministry denounced the attack as a "war crime" and pledged to track down the perpetrators.
Taliban spokesman Zabihullah Mujahid claimed their fighters had managed to enter the offices of the National Directorate of Security, the main spy agency.
The Taliban are generally known to exaggerate battlefield claims.
Pitched gunbattles were ongoing near the building, which was cordoned off by security officials as ambulances rushed to the scene.
"(We) condemn in the strongest terms the terrorist attack in Puli Mahmood Khan neighbourhood of Kabul, as a result of which many of our countrymen were martyred and wounded," President Ashraf Ghani said in a statement.
"Such cowardly terrorist attacks will not weaken the will and determination of Afghan security forces to fight against terrorism."
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