A suicide car bomber struck a US consulate vehicle in Peshawar on Monday, killing four people in the deadliest attack targeting Americans for two years in the frontline state in the war on Al-Qaeda.

The US State Department said no American consulate personnel were killed, but a cabinet minister insisted two Americans were among the dead.

Up to 19 people were wounded when the bomber struck during the morning rush hour in Peshawar, near the office of the UN Refugee Agency (UNHCR) and residential quarters used by the US consulate.

The US State Department said a consulate vehicle was hit in an apparent terrorist strike but said no US consulate staff were killed.

Spokeswoman Victoria Nuland said two Americans and two Pakistanis working for the mission were receiving medical treatment for their wounds, and that the United States was "seeking further information about other victims".

But Mian Iftikhar Hussain, information minister for Khyber Pakhtunkhwa province, said four people were killed, two of them Americans.

When asked to comment on the US statement, Hussain said: "What can I do if they are denying? Police confirmed to me that two of the dead were American diplomats."

Security officials told AFP that the US vehicle was the target and a half-burnt US passport was recovered from a vehicle after the attack.

Peshawar police chief Imtiaz Altaf said 19 people were wounded in the blast and that the bomber's vehicle had been packed with up to 110 kilogrammes (240 pounds) of explosives, including more than 10 mortar shells.

An AFP reporter saw two dead bodies in a hospital morgue, one of which was burnt beyond recognition. The other appeared to be of a local resident.

Police said they believed the two bodies belonged to passers by.

Mohammad Sadid, 35, said he was driving to work at his pharmacy when he heard a deafening blast on the opposite side of the road in University Town neighbourhood.

"It was so powerful that it jolted my car with a massive jerk. My head banged the steering wheel and the wind shield. I couldn't understand what had happened. I saw a car on fire. It became a large fireball," he told AFP.

The explosion left a crater in the road, damaged vehicles and demolished the facing walls of four nearby houses, an AFP reporter said.

Hussain called the bombing "a dangerous move from the terrorists", adding that "they want to terrorise the foreigners". President Asif Ali Zardari has condemned the terror attack in Peshawar.

In a statement he said such incidents of terror cannot deter the government's resolve to wipe out the menace of terrorism.

Condemning the blast‚ Interior Minister Rehman Malik has sought report IG Police Khyber-Pakhtunkhwa.