At least five civilians and two security force personnel were wounded in the clash, the latest in a series of stand-offs between Ghani and Atta Mohammad Noor.
A gunbattle erupted on Thursday between Afghan forces and supporters of a powerful politician in the northern city of Mazar-i-Sharif who rejected the appointment of a new provincial police chief by President Ashraf Ghani, officials said.
At least five civilians and two security force personnel were wounded in the clash, the latest in a series of stand-offs between Ghani and Atta Mohammad Noor, the former governor of Balkh province who has repeatedly defied Ghani's attempts to retain control over his northern stronghold.
Noor is a leading figure in Jamiat-e Islami, a party that represents Afghanistan's Tajik minority. He served as Balkh's governor for more than a decade.
Noor accused Ghani of trying to remove a potential rival and divide Jamiat by appointing his supporters to powerful posts to manipulate the presidential elections in July.
Last month, a governor of the northern province of Samangan defied an attempt by Ghani to remove him.
In a statement posted online, Noor called on city residents to keep shops and markets closed. He said Ghani must withdraw the appointment of Abdul Raqib Mobarez as the province's new police chief.
The deadlock has highlighted a fractious political climate and Ghani's attempts to retain control over provinces and opposition leaders ahead of an expected close election.
"The presidential palace has always been plotting conspiracies with its arbitrary policies. I ask all residents, men and women, of Balkh to be fully ready for defending their dignity," said Noor.
Noor, a former commander in the anti-Soviet Mujahiddin and considered one of the richest men in Afghanistan, has faced repeated accusations of corruption, which he denies. In 2015 Human Rights Watch said there was “strong evidence that he controls and funds local militias implicated in serious abuse”.
Balkh, which sits on vital trade routes into central Asia, is also one of Afghanistan’s most stable and prosperous provinces, with a much smaller Taliban and Islamic State presence than in other northern regions.
A senior official at the presidential palace said Ghani's decision to appoint a new police chief in Balkh was "free from bias".