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Indonesian police shot dead a suspected militant linked to the Islamic State group during a firefight at a government office Monday after a small bomb was set off nearby.

Witnesses described terrifying scenes as the attacker stormed into the building brandishing a dagger and began yelling at staff and starting fires. TV footage showed heavily armed police firing on the office through clouds of smoke.

But no one apart from the attacker was hurt in the incident in the city of Bandung on Java island, which started with a pressure cooker bomb exploding in a park before the gun battle erupted in the office opposite.

Terror

Police said the attacker was a former terror convict from an IS-supporting network called Jamaah Ansharut Daulah, which has been blamed for a series of recent attacks in Indonesia including an assault in Jakarta last year.

Indonesia - the world's most populous Muslim-majority country - has long struggled with Islamist militancy and hundreds of radicals from the country have flocked to fight with IS, sparking fears that weakened extremist outfits could get a new lease of life.

After the blast at about 8:30m (1:30 GMT), the attacker fled into a building belonging to local authorities opposite the park and set it ablaze.

Police exchanged fire during an hour-long standoff with the man, who threw a second bomb at officers during the gun battle.

They eventually shot him in the stomach and he died later in hospital.

Everyone was evacuated from the building unhurt. Police seized guns and two backpacks carried by the attacker but did not say what they contained. 

New threat

National police chief Tito Karnavian said the attacker belonged to Jamaah Ansharut Daulah (JAD) and had demanded that authorities release his associates from prison. 

Indonesian security forces have arrested hundreds of militants during a sustained crackdown in recent years.

"He belongs to the group JAD - it is a main supporter of [IS]," Karnavian told reporters. "He asked for his friends to be released from prison."

He said the attacker, whom he did not name, had been jailed over his involvement with militant training in Jantho in Aceh province. Jantho was the location of a notorious Islamist extremist training camp, which was closed down by authorities in 2010.

Last month the US designated JAD a terrorist organisation, saying the network was an umbrella group for about two dozen Indonesian extremist outfits.

Last year's gun and suicide attack in the capital left four attackers and four civilians dead, and was the first assault claimed by IS in Southeast Asia.

JAD has also been blamed for a firebomb attack on a church that killed a toddler and a foiled plan to launch a Christmas-time suicide bombing.

Numerous recent IS-linked plots in Indonesia have been botched or foiled, with analysts saying that many of the country's militants lack the capacity to launch serious attacks.

Indonesia has suffered a series of Islamic militant attacks in the past 15 years, including the 2002 Bali bombings that killed 202 people, mostly foreign tourists.

A sustained crackdown weakened the most dangerous networks but the emergence of IS has proved a potent new rallying cry for radicals.