Three fighters were also arrested on Sunday, the ministry's statement said. Four policemen and one fighter were wounded in the fire fight, which broke out in al-Salimiya district, about 20km east of the capital, after police cordoned off an area in search of wanted fighters.
Kuwait television said security forces had stormed a building where "terrorists" were hiding and that a heavy exchange of gunfire took place.
"The shooting began about 9:30am (0630 GMT) after police sealed off a main street, the one with all the restaurants on it," one witness said , adding that special forces arrived on the scene to back up police.
Al-Salimiya is a residential neighbourhood that includes many residents.
Earlier shoot out
The incident came two weeks after a shootout between fighters and Kuwaiti security forces left one Saudi gunman dead in Um al-Haiman, south of the capital near the border with Saudi Arabia.
The gun battle, near the largest US military base in Kuwait, came five days after another clash closer to Kuwait City left two security officers and a Kuwaiti suspect dead.
Kuwait is questioning a number
of fighters rounded up recently
The authorities have seized arms and explosives in subsequent raids around the tiny oil-rich emirate, and according to Interior Minister Shaikh Nawaf al-Ahmad al-Sabah arrested about 15 suspected fighters.
However, an unspecified number including the group's spiritual leader are still at large. Shaikh Nawaf acknowledged that the militants belonged to an organised group, but the country's national guard chief, Shaikh Salim al-Ali al-Sabah, said some of the group were members of al-Qaida.
The US, British and French embassies in Kuwait have advised their nationals to avoid certain areas in the country and warned of the danger of more unrest.