Five police officers are reported dead and more than 30 wounded in an operation against gunmen in the former Yugoslav Republic of Macedonia.

It happened in a suburb of Kumanovo, around 40 kilometres north of Skopje.

The mainly Albanian neighbourhood of the town was sealed off and residents evacuated amid a day of fighting.

“I have not slept since early this morning, I’m very afraid,” said one woman.

A man added: “We heard shots this morning. We’ll see what happens next.”

The interior ministry said a “well trained terrorist group” had entered Macedonia with a plan to carry out attacks and members were sheltering in Kumanovo.

“We have friends and family there, we know them all,” said a local resident.

“What the authorities are say, that there are terrorists there, is absurd. This is conjured up by the state. It’s a policy of the prime minister, to hide other crimes.”

The fighting comes as Macedonia’s government faces allegations of illegal wire tapping and widespread a