At least 22 people - 14 of whom were foreign nationals - were killed during an hours-long standoff at the hotel, which sits on the edge of town behind checkpoints on a hill.
The blast was followed by gunshots and a gun battle continues, the official said.
Photo Afghan civilians gathered Wednesday in Jalalabad as smoke billowed nearby.
Al Jazeera said two attackers are thought to have entered the NGO's office, adding that special forces and ambulances have arrived on the scene.
It was not known if any Save the Children staff remained in the building.
At least 11 people were wounded in the blast that was caused by a auto bomber outside the headquarters of the NGO in the city of Jalalabad early Wednesday morning, Afghanistan's Tolo news network reported.
A Save the Children spokesperson said: "Our primary concern is for the safety and security of our staff". Save the Children's main Afghanistan office said it was "devastated" about the assault and was awaiting further information.
"I am hearing gunfire from inside Save the Children compound".
No group had claimed responsibility for the attack, and the Taliban issued a statement denying that they were involved.
Taliban spokesman Zabihullah Mujahid said on Twitter the militant group had no involvement in the incident. Mr. Khogyani said four attackers were involved, though a security official put the number at three.
Photo Vehicles ablaze outside the aid agency's office.
Save the Children carries out education, healthcare and protection work for Children in Afghanistan.
Nick Kay, the United Kingdom ambassador to Afghanistan, called the attack an outrage and crime against humanity.
In October, the Red Cross announced that it was drastically reducing its operations in Afghanistan following attacks that killed seven of its staff a year ago.