Tuesday's bomb exploded by a checkpoint barrier about 60m from the headquarters of the Supreme Council for the Islamic Revolution in Iraq (SCIRI), an important Shia party.
"A suicide bomber tried to drive into the Jadriyah office of SCIRI," Haitham al-Hussaini, a spokesman for the party, said.
Rida Jawad Taqi, head of SCIRI's political relations, told Aljazeera: "Terrorists and extremists from al-Qaida and al-Zarqawi groups are behind the attack, particularly those coming from outside Iraq."
Iraqi journalist Ziyad al-Samarrai told Aljazeera the number of casualties might rise as the blast occurred near Baghdad University, which is usually crowded with students.
Al-Samarrai said that the bomb probably targeted the SCIRI office and that the building was damaged in the explosion.
Iraqi police and US forces have closed off the explosion site, preventing everyone from approaching, he said.
In a separate development, an Iraqi group calling itself The Islamic Resistance Group in Iraq - al-Numan Brigades has posted a videotape on its website showing what it called eight Chinese captives and alleging that they were working with US forces in Iraq.
A spokesman for the captors threatened to kill the eight Chinese within 48 hours unless China clarifies its role in Iraq.
"Terrorists and extremists from al-Qaida and al-Zarqawi groups are behind the attack, particularly those coming from outside Iraq"
Rida Jawad Taqi,
head of SCIRI's political relations
Also Tuesday, one of interim Prime Minister Iyad Allawi's candidates in the 30 January elections was killed in the southern city of Basra, officials in Baghdad and Basra said.
The officials, who did not give the name of the victim, said he was killed on Tuesday morning.
Fighters trying to derail Iraq's election have repeatedly attacked government officials and election workers.
Iraq is to close its borders, extend night curfews and restrict movement inside the country to protect voters, election officials said on Tuesday.
Iraq's borders will be closed from 29 to 31 January except for Muslim pilgrims returning from the Haj in Saudi Arabia, according to a statement by Farid Ayar of Iraq's Independent Electoral Commission.
Iraqis will be barred from travelling between provinces and a night-time curfew will be imposed, he said.
Aljazeera also learned that clashes erupted on Tuesday between Iraqi soldiers and fighters on the main highway near al-Dura area, south of Baghdad.
An Iraqi police source said there were casualties but gave no other details.