"What I seem to gather from our sources there is that two vehicles came up to the barrier. One of them was a small minibus carrying children [going] to school. In the opposite direction came a car apparently laden with explosives and rammed the police checkpoint and the bomb was detonated."
Witnesses said seven people, including five security men and two civilians, were killed.
Eight policemen and four school students were also injured, according to security sources.
Fighting has intensified in the mountainous region of NWFP where Taliban fighters began expanding their control after striking a deal with the authorities for imposition of Islamic sharia law.
The February agreement and rising Taliban influence have raised concern in the US about the ability of nuclear-armed Pakistan - crucial in stabilising Afghanistan - to stand up to the Taliban and al-Qaeda.
The clashes have forced thousands of civilians to flee the area.