Gunmen killed a Saudi child and a Pakistani man during an attack on workers at a building project in the restive eastern Saudi Arabian region on Wednesday, the Saudi interior ministry said on Friday.

The gunmen tried to stop redevelopment work in the old quarter of the town of Awamiya, where authorities say militants are hiding, said an interior ministry spokesman quoted by state news agency SPA.

They fired at security personnel and passersby, killing a two-year-old Saudi child and a Pakistani national, and wounding ten others, including two Pakistanis, he said.

"Workers were shot at by terrorist elements from the neighbourhood to obstruct the project and protect abandoned houses used to ... kidnap citizens," said SPA.

The attack took place in Qatif, an oil-producing province that has witnessed protests for more rights in the country.

Residents and activists told Reuters on Wednesday that several people were injured during clashes between security forces who had entered the old part of the town known as al-Musawara (the walled part) backed by bulldozers.

A local newspaper reported Saudi security forces shot dead a wanted man.

Authorities say the narrow streets of the old town, built during Ottoman rule more than 200 years ago, have become a hideout for militants believed to be behind attacks on security forces in the region.

Awamiya has long been a flashpoint between the government and residents complaining of discrimination. Tensions have increased since Nimr al-Nimr, a cleric convicted of inciting violence, was executed a year ago.

Some citizens complain of marginalisation in the birthplace of Islam. Authorities deny these accusations and have said those killed since protests began in early 2011 were shot in exchanges of fire.