"I believe that anti-Pakistan elements, who want to destabilise our country and see defeat in Swat, have now turned to our cities," Rehman Malik, Pakistan's interior minister, said.

Black smoke rose above the city as ambulances ferried the many wounded to hospitals. Doctors quickly declared an emergency and appealed for blood donations.

Building collapse

Bhutta said 24 people had been killed, but the toll could rise as rescuers search through the rubble for more bodies.

One policeman said that there had been 30 to 35 policemen inside the police station at the time of the blast.

In depth


 Video: Bomber hits Lahore
 Diary: Imran Khan
 Riz Khan: Obama's 'AfPak' strategy
 Riz Khan: The battle for the soul of Pakistan
 Interview: Asif Ali Zardari
 Q&A: The struggle for Swat
 Your views: Crisis in Swat
 The fight for northwest Pakistan
Talking to the Taliban
Pakistan's war
 Witness: Pakistan in crisis

"The building collapsed," he said.

"I was at the back of the building and am fortunately alive. I was on duty and listening to calls when it happened."

Sources also suggested that the attackers were trying to get into the building belonging to the ISI.

Al Jazeera's Imran Khan, reporting from the scene just hours later, said that the blast took place on Mall Road, a busy commercial district in the centre of Lahore.

"People are frantically pulling other people from the rubble. I've spoken to the rescue services and there are still people trapped," he said.

Hospitals were overcrowded with the injured and local television showed a doctor trying to revive someone on the floor.

There was no immediate claim of responsibility for the attack, but the government has branded it as a revenge attack for its military campaign against the Taliban.

Military campaign

Pakistan's army has for weeks been battling Taliban fighters in the Swat region of the North West Frontier Province (NWFP).

The ISI is not directly involved in the fighting in Swat, but is responsible for gathering intelligence to support the operation.

Al Jazeera's Mike Hanna, reporting from Islamabad, said that there was a fear the attack was linked to the military offensive.

"This is the first attack in Punjab province since the [military's] campaign began about a month ago," he said.

"There had been speculation that there would be some retaliation, although we don't know at this point who is responsible [for the Lahore attack]."

Wednesday's blast was the third major attack in Lahore, Pakistan's second-largest city, in recent months.

Town recaptured

Mosharraf Zaidi, a Pakistan-based political analyst, told Al Jazeera: "The speculation is that this is the Taliban, but it could be one of many other groups that have been operating in this country for the last while."

He said that targeting Lahore, rather than Peshawar, the NWFP's provincial capital, could be an attempt to exploit ethnic divisions in Pakistan.

Wednesday's blast was the third major attack Lahore has seen in recent months [AFP]

In Swat, meanwhile, there has been no respite for residents from violence.

The Pakistani military claimed on Wednesday to have taken back Mingora, the valley's main city.

Hameedullah Khan, an Al Jazeera producer and one of the first journalists into the area, said: "The military are saying they have killed 268 Taliban in Mingora city and they said the militants have fled to the mountains, upwards."

While shops and buildings have been destroyed, he said the destruction did not appear to be as bad as Mingora's residents - most of whom had fled the fighting - had feared.

"Mingora is totally calm now, there's no one in the city. You will find only the military men standing alert on the streets of Mingora," he said.