A suicide bomber killed at least 26 people at a gathering of Taliban and Afghan armed forces in the eastern province of Nangarhar on Saturday, an official said, as soldiers and militants celebrated an unprecedented Eid ceasefire.

The blast in the town of Ghazi Aminullah Khan wounded at least 54 others ─ including Taliban, security forces and civilians ─ who were marking the suspension of fighting in Nangarhar's Rodat district, according to Attaullah Khogyani, spokesman for the provincial governor, Tolo News reported.

Dozens of unarmed Taliban militants had earlier entered the Afghan capital and other cities to celebrate Eid. Afghan security forces and civilians hugged and took selfies with each other across the country, in an outpouring of emotion over the ceasefire.

"A suicide bomber detonated among people, security forces and Taliban who were celebrating the ceasefire," provincial governor spokesman Attaullah Khogyani told AFP.

The militant Islamic State group claimed responsibility for the attack. The group's Amaq news agency said the target was "a gathering of Afghan forces" but gave no details. The Taliban had already denied involvement.

The Taliban had announced a ceasefire for the first three days of Eid, which started on Friday, promising not to attack Afghan security forces for the first time since the 2001 US invasion. They said they would continue attacking US-led Nato troops.

The Taliban's ceasefire followed President Ashraf Ghani's announcement that police and troops would cease operations against the Taliban for eight days, starting last Tuesday — though he warned that operations against other militants, including IS, would continue.

The attack came as Ghani announced an extension of the government's week-long ceasefire with the militant group after both sides agreed to halt hostilities for Eid.

Ghani made the statement in a rare televised address to the nation, in which he also asked the Taliban to extend their three-day ceasefire which is due to end on Sunday, and to begin peace talks.

"I order the security forces to remain on their defensive positions," Ghani said, adding details of the extension would be released later.

It was not clear if Ghani knew about the bomb in the east when he made his address.

'Tired of war'

In the contested district of Bati Kot in Nangarhar, Taliban fighters carrying assault weapons and rocket-propelled grenade launchers travelled by car and motorbike, waving Afghan and Taliban flags.

Afghan forces manning checkpoints offered Eid greetings to the fighters, embracing and posing for photos with the same people they are usually trying to kill — a scene that would have been unthinkable only a few days ago.

Villagers also flocked around the insurgents, hugging them and happily taking selfies with the heavily armed fighters as they celebrated Eid.

"I am here to offer greetings to our brothers in the police and army," Taliban commander Baba told AFP.

"We have held the ceasefire well so far. Everyone is tired of war and if our leaders order us to continue the ceasefire, we will hold it forever."

Afghans shared photos on social media purportedly showing Taliban fighters around the country gathering with security forces and locals for the holiday.

The bizarre images served as powerful propaganda for both sides and have fanned hopes among war-weary Afghans for the ceasefire to continue.

"Look, they are brothers. If their leaders come, sit and talk just like their soldiers we will have peace tomorrow," Said Hasibullah posted on Facebook under a photo purportedly showing a Taliban fighter and Afghan soldier having a cup of tea together.

The Taliban had "exploited" the opportunity to show their popularity among ordinary Afghans, a Western diplomat in Kabul told AFP.

"(That's) no bad thing if they are able to see the benefits of talking not fighting," he said.

"They are unarmed, as they handed over their weapons at the entrances," Kabul police spokesman Hashmat Stanekzai told Reuters. Their weapons would be returned when they leave, he said.

Interior Minister Wais Ahmad Barmak met Taliban fighters in Kabul, Tolo news said, an unthinkable prospect just two weeks ago.

Video and pictures on news websites showed cheerful soldiers and Taliban hugging one another and exchanging Eid greetings in Logar province, south of Kabul, in Zabul in the south and in central Maidan Wardak. Some people were dancing and clapping as onlookers took photos.

Members of rights groups organised a brief meeting between Afghan forces and Taliban insurgents in Helmand's capital city, Lashkar Gah, where the Taliban have delivered a series of blows to government forces this year.

'Hard to describe joy'

Men and women gathered around the soldiers and Taliban fighters and urged them to keep their weapons holstered before they hugged each other.

"It was the most peaceful Eid. For the first time we felt safe. It is hard to describe the joy," said Qais Liwal, a student in Zabul.

The main square of Kunduz city, capital of the province of the same name, which has witnessed a series of bloody clashes, became a friendly meeting ground.

Resident Mohammad Amir said his younger brother had told him the Taliban were casually entering the city.

"I could not believe my eyes," he told Reuters. "I saw Taliban and police standing side by side and taking selfies."

Photos on news websites showed armed police standing in line at the corner of the street hugging Taliban fighters one by one.

A video showed a huge crowd of people screaming and whistling as they welcomed the Taliban. In some districts of the eastern city of Jalalabad, civilians were offering dry fruit, traditional sweets and ice cream to Taliban militants.

A Reuters reporter in Jalalabad saw more than a dozen Taliban insurgents enjoying their food and playing with children.

The unusual bonhomie between the two sides came as Ghani confirmed that banned Tehreek-i-Taliban Pakistan (TTP) leader Mullah Fazlullah had been killed in a US drone strike.

US forces targeted Fazlullah in a counterterrorism strike on Thursday in eastern Kunar province, close to the border between Afghanistan and Pakistan, US officials said, without confirming his death.

Ghani said Pakistani leaders had assured him the strike was a "great step toward building trust between the two nations," while urging them to "bring (the) Afghan Taliban residing in Pakistan to the negotiation table".

On Tuesday, Chief of Army Staff General Qamar Javed Bajwa visited Kabul where he met with Ghani.

'US ready to support peace'

US Secretary of State Mike Pompeo echoed Ghani's address, saying peace talks would have to include a discussion on the role of "international actors and forces".

"The United States is prepared to support, facilitate, and participate in these discussions," Pompeo said in a statement.

"The United States stands ready to work with the Afghan government, the Taliban, and all the people of Afghanistan to reach a peace agreement and political settlement that brings a permanent end to this war."