"More than 500 insurgents attacked army after an operation was launched in Paktiya province. 49 militants and five soldiers have been killed," Xinhua quoted Mohammad Zahir Azimi, a defense ministry spokesman, as saying in his twitter account.
One army soldier was held captive. Several foreign militants were also involved in the clash, he said.
Azimi said that the operation was launched early on Monday and ended on Tuesday morning.
The army also called in air force support from NATO-led coalition forces. The coalition responded to the attack, the spokesman said.
Six army soldiers were also wounded during the exchange of fire between the insurgents and army in the province, 100 km south of the country's capital Kabul, Azimi said.
Two foreign soldiers were also killed as a result of Taliban attacks in eastern Afghanistan, the NATO-led coalition forces confirmed in a statement.