Dhaka: Bangladesh army commandos shot dead two suspected militants at a hideout in the northeast Sunday, a day after six people died in explosions claimed by the Islamic State group.

"Our commandos could effectively engage two of them. We can confirm the two were killed," Brigadier General Fakhrul Ahsan told reporters in the city of Sylhet.

Ahsan said the commandos, armed with rocket launchers as well as rifles, located the men wearing suicide vests on the ground floor of a five-storey building and shot them dead.  

"The suicide vest of one of them (who died) also exploded," he said.

Ahsan said the operation was continuing because one or more of the extremists -- who were well armed and equipped -- were still holed up in the building where they had laid improvised explosive devices.

He did not comment on their identities but police said they were members of a homegrown Islamist militant outfit blamed for a wave of attacks in recent years.

On Saturday two powerful bombs ripped through a crowd near the hideout, killing six people including two police officers and injuring about 50.

The Islamic State's claim of responsibility was rejected by the government and police.

The blasts went off some 400 metres from the hideout, targeting police and hundreds of onlookers who were watching the commando raid.

Deputy Commissioner of Sylhet police Basudeb Banik said several of the injured were in critical condition, including the intelligence chief of the elite Rapid Action Battalion, which is tasked with combating Islamist extremism.

He is being flown to Singapore for treatment, police said.

Police suspect the blasts were the work of a new faction of the banned extremist group, Jamayetul Mujahideen Bangladesh (JMB), which has carried out a series of deadly attacks on foreigners and religious minorities since 2015.

The bombs went off after an hours-long exchange of gunfire Saturday as commandos cut window bars to rescue 78 civilian hostages from the hideout.

The commandos backed by armoured personnel carriers launched the operation after a 30-hour standoff that began early Friday, when police sealed off the building as militants detonated small bombs.

The raid followed a series of suicide attacks on security installations by Islamist extremists this month, including one on a police checkpoint near the country's main international airport in Dhaka on Friday.

Two of the three attacks, including Friday's blast in which the suicide attacker was killed, were claimed by IS.

This month police also stormed a building outside the port city of Chittagong, killing four members of JMB including a woman.

IS has claimed responsibility for a spate of killings in the country, including a major attack on a Dhaka cafe last year in which 22 people including 18 foreigners were killed. 

The government denies IS has any presence in the country, arguing instead that the new JMB faction was behind the attacks.