Bangladeshi police killed nine suspected Islamist extremists in a gun-battle Tuesday, July 26, after storming a hideout where they said a new mass attack was being planned, AFP reports.

Police said they belonged to a Bangladeshi group blamed for an attack on a Dhaka cafe earlier this month in which 20 hostages, mostly foreigners, were killed and had been planning another large-scale assault.

"Nine Islamist militants were killed after two hour-long gunfight" deputy commissioner of Dhaka Metropolitan Police (DMP) Masud Ahmed told AFP, adding another extremist was shot and arrested during the raid in the capital's Kalyanpur neighbourhood.

National police chief A.K.M Shahidul Hoque told reporters they suspected all 10 were members of the homegrown extremist group Jamayetul Mujahideen Bangladesh (JMB), which was blamed for the Dhaka cafe attack.

Islamic State (IS) group claimed responsibility for the attack and posted gruesome images of the carnage before the military stormed the cafe.

Bangladeshi authorities have rejected the claim, saying international jihadist networks have no presence in the world's third largest Muslim majority nation.