At least seven people have been killed and 20 injured in a late-night explosion at a street cafe on the outskirts of Pakistan's capital which police suspect to be a bomb attack.

The incident in Islamabad late on Tuesday came hours after a US diplomat narrowly-escaped an ambush in the country's northwest.

Police said the attackers may have been targeting the head of the US consulate in Peshawar.

Ahmed Latif, a senior police official, described Tuesday's explosion in Islamabad as a low-intensity bomb but said it is unclear why the site was chosen, saying the civilian casualties were not the usual targets of fighters.

In Peshawar, Arshad Khan, the police chief, said the armoured vehicle Lynne Tracy, the US diplomat, was travelling in came under heavy gunfire after two men armed with assault rifles blocked the vehicle.

No one was hurt in the attack, which has raised fears that other foreigners could be targeted.

Pakistan's foreign ministry condemned the attack, saying the government was committed to ensuring the security of diplomats in the country.

Political uncertainty

The incident occurred hours after the collapse of the governing coalition that drove Pervez Musharraf from the presidency and amid escalating violence by fighters.
 
Pakistan's political uncertainty has led to escalating violence in recent weeks, with a spate of suicide bombings and other attacks.

The US and other Western governments have been watching Pakistan's ruling coalition unravel since Musharraf, a close ally, resigned last week after nearly nine years in power to avoid the humiliation of impeachment.

Monday's decision by the coalition's second largest party to quit the government could concentrate power in the hands of a more Western-leaning party, which has pledged to support the US-led war against extremist groups.