The vehicle was seen burning in front of the building, sending up plumes of smoke.
Iraqi journalist Ziyad al-Samaraei told Aljazeera on Monday that a car bomber targeted the headquarters of Allawi's al-Wifaq Party (Iraqi National Accord) in al-Zaitun street in Baghdad.
He said the headquarters had previously come under repeated mortar attacks, but this time a bomber managed to break through the checkpoints of the headquarters and blow up his booby-trapped car.
Seven Iraqi policemen were killed, including an officer, and 23 others injured in the explosion which targeted a checkpoint near al-Wifaq Party headquarters, police sources told al-Samaraei.
The journalist reported that ambulances rushed to the explosion site and US forces and Iraqi police completely cordoned off the area, with helicopters hovering above.
The blast tore through the area just minutes before leaders of Allawi's party had been due to hold a news conference to present candidates for the planned 30 January election.
Allawi was not inside the building
at the time of the blast
The party headquarters was not damaged. Allawi was not inside the building at the time of the blast.
This blast comes after a car bomb attack last Monday on Iraqi Shia leader Abd al-Aziz al-Hakim's Baghdad offices that killed 13 people.
Fighters have been pressing a bloody campaign of bombings and assassinations aimed at driving out US-led forces, toppling the interim government and disrupting the national ballot.
Al-Samaraei also reported that the Iraqi National Guard headquarters in al-Ghazaliya area, west of Baghdad, came under heavy mortar attacks. "The attacks lasted for more than 20 minutes," he said.
"Violent clashes have also erupted in al-Aadhamiya area and al-Shaab city," he added.
Separately, a US military armoured vehicle was damaged when an explosive device detonated in al-Mutasim neighbourhood in central Samara city, sources told Aljazeera.
Violent clashes later erupted between US forces and fighters, using rocket-propelled grenades and machine guns.