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Gunfire broke out on Thursday at the home of South Sudan's powerful yet recently sacked intelligence chief Akol Koor, a military source said, with the UN branding it an attempted arrest.

Shots began ringing out in the evening in Juba, the capital of the corruption-riven country plagued by power struggles and ethnic infighting. The fighting lasted about an hour, according to an AFP journalist.

A military source supposedly involved in the operation told Sudan's Post newspaper that Koor had been arrested after intense fighting that reportedly left dozens of his soldiers dead or wounded.

In an alert to its staff on the ground, the UN reported a shooting linked to the former head of intelligence's detention, advising people to take cover.

Yet it was unclear whether Koor had indeed been arrested or not.

Confirming the shootout, military spokesman Lul Ruai Kong said that it involved "our own security forces that had been deployed there to provide extra security".

"We do not know what had happened and that misunderstanding degenerated in gunfire," Kong said, adding that two servicemen were shot and wounded in the fighting before the situation was contained.

In October, South Sudan's President Salva Kiir dismissed the powerful intelligence services head, who had been in post since the country gained independence in 2011.

No reason was given for his firing.

The move however came two weeks after the government again postponed by two years the first elections in the nation's history.

South Sudan is one of the poorest countries on the planet and ranks 177 out of 180 countries on Transparency International's corruption perceptions index.