* Car bomb explodes near aid agency in Afghanistan's east
* At least five dead, 24 people wounded
* Islamic State claims responsibility
* Province near Pakistan border is Islamic State bastion (Updates casualty total, adds quotes, detail)
By Rafiq Sherzad and Ahmad Sultan
JALALABAD, Afghanistan, Jan 24 (Reuters) - Gunmen stormed an office of the Save the Children aid agency in Afghanistan's eastern city of Jalalabad on Wednesday and at least five people were killed and 25 wounded in a daylong battle with security forces before the attack was finally suppressed.
Islamic State claimed responsibility for the assault, which began with a suicide car bomb outside the office in the morning and continued as gunmen entered the compound where they resisted Afghan security forces for about 10 hours.
Black smoke funnelled into the sky from the area as gunmen battled special forces through the afternoon. Up to 45 people who had taken refuge in a fortified "safe room" in the compound were rescued by late afternoon, but fighting continued past nightfall when officials said the last attacker was killed.
"The fight is over," the provincial governor's spokesman, Attaullah Khogyani, told reporters.
Authorities said three Save the Children employees had been killed, including one guard, as well as a member of the Afghan security forces and a shopkeeper.
In addition to the suicide bomber who blew himself up, four other gunmen were shot by security forces. Witnesses said at least some of them were in police uniform, a commonly used tactic.
The raid began with a huge blast at around 9 a.m. that rocked the neighbourhood, where other aid groups and government buildings are based. A neighbouring building of another aid group caught fire but all staff were evacuated.
"Right after that children and people started running away," said Ghulam Nabi, who was nearby when the bomb exploded. "I saw a vehicle catch fire and then a gunfight started."
Islamic State, in a statement on its Amaq news agency, said the attack targeted British, Swedish and Afghan government institutions. Save the Children was founded in Britain, and a Swedish aid group office and a building of the Afghan Department of Women's Affairs are near the compound.
The attack underlines how difficult operating in Afghanistan has become for humanitarian aid groups, which have faced heavy pressure from armed groups and kidnappers. In 2017, a total of 17 aid workers were killed and 32 injured in the country.
Save the Children, which says it reaches almost 1.4 million children in Afghanistan, said that for the moment it had closed its offices in Afghanistan. It has operated in Afghanistan since 1976, working in eight provinces as well as in three others through partnership agreements.
"We are shocked and appalled at the violence carried out against our staff in Afghanistan, who are dedicated humanitarians, committed to improving the lives and wellbeing of millions of children across the country," Save the Children International CEO Helle Thorning-Schmidt said in a statement.
"We have temporarily suspended our operations across the country following today's events. However, we remain fully committed to helping the most deprived children of Afghanistan."
In October, the Red Cross said it was drastically reducing operations in Afghanistan following attacks that killed seven of its staff.
"An attack against an organisation that helps children is outrageous. Civilians and aid workers must not be targeted," said Monica Zanarelli, head of the Red Cross delegation in Afghanistan, in response to Wednesday's attack.
"Increased violence has made operating in Afghanistan increasingly difficult for many organisations."
President Ashraf Ghani, whose government has been under heavy pressure to improve security, also condemned the attack in a statement in which he called on neighbouring countries not to help militant groups.
Jalalabad is the capital of Nangarhar province on the porous border with Pakistan. Nangarhar has become a bastion of Islamic State, which has grown into one of Afghanistan's most dangerous militant groups since it appeared around the beginning of 2015.
Backed by intensive U.S. air strikes, Afghan forces have claimed growing success against the Taliban and other militant groups, including Islamic State. But militant attacks on civilian targets have continued, causing heavy casualties.
The attack in Jalalabad occurred just days after Taliban militants raided the Hotel Intercontinental in the capital, Kabul, killing at least 20 people, including 13 foreigners. (Additional reporting by Mirwais Harooni and James Mackenzie in KABUL, Stephanie Ulmer-Nebehay in GENEVA and Eric Knecht in CAIRO; Writing by Robert Birsel; Editing by Mark Heinrich)
Our Standards: The Thomson Reuters Trust Principles.