Two Canadian soldiers have been wounded, one seriously, in a gunfight with insurgents west of Kandahar City.

The soldiers were hurt during a fierce battle that raged throughout the night and into most of Saturday morning, until around noon local time, a military spokesman said.

One of the soldiers was wounded by a coalition bomb. He is said to be in good condition and is expected to make a full recovery, Canadian officials said.

The more seriously wounded soldier, listed in serious but stable condition, was to be airlifted to the U.S. military hospital in Landstuhl, Germany.

It was relentless battle carried out in a maze of villages and farmers' fields, the CBC's Brooks DeCillia said from Kandahar.

"We spent most of the morning with artillery units that blasted round after round at the insurgents, about 10 to 20 kilometres away, shelling not only where the insurgents were hiding, but their escape routes, allowing infantry soldiers to engage them."

The wounded soldiers were airlifted by helicopter from the battlefield in Panjwai District, a military official said.

Their names have not been released.

Fighters loyal to the old Taliban regime fought back with gunfire and rocket-propelled grenades, injuring a total of five coalition soldiers. Five of the insurgents were killed and three were captured, military officials said.