Two Turkish policemen and seven Islamic State militants were killed in a firefight after police raided more than a dozen houses in Turkey's southeast early on Monday, security sources and government spokesman Numan Kurtulmus said on Monday.

The clash took place in the Kayapinar district of the mainly Kurdish city of Diyarbakir. It was the first such shoot-out between Turkish security forces and suspected Islamic State militants in an inner city; previous confrontations have taken place on the Turkish-Syrian border.

Five police officers were wounded while 12 militants were captured alive, Kurtulmus said.

"An important Islamic State cell has been neutralized," he told reporters. "Work to identify (militants) and to uncover their connections in other cities is still under way."

A video released by the Dogan news agency showed two armored police vehicles moving toward a row of houses as gunfire echoed in the background.

Turkish authorities have extended operations into suspected Islamic State cells after a double suicide bombing in Ankara that killed more than 100 people, the worst attack of its kind in Turkey's modern history, was blamed on the militant group.

Last week, President Tayyip Erdogan said Syrian intelligence and Kurdish militants, not only Islamic State, were behind the attack on a rally of pro-Kurdish activists and civic groups.

Erdogan said Kurdistan Workers' Party (PKK) militants, the Syrian "mukhabarat" secret police and the Syrian Kurdish PYD militia had worked together with Islamic State in the bombing on Oct. 10.

(Reporting by Seyhmus Cakan and Can Sezer; Writing by Ece Toksabay and Humeyra Pamuk; Editing by Kevin Liffey)