Medical and rescue efforts at the blast site have been complicated by power outages resulting from the explosion.

'Popular' hotel

Peshawar is the capital of the North West Frontier Province (NWFP), where Pakistani government forces have battled fighters loyal to the Taliban in recent weeks.

Taliban fighters had threatened to stage a series of attacks against civilian and government targets in retaliation for the military offensive in the province.

Inayat Ali Khan, a local journalist, said that the attack was similar in execution to previous attacks in Peshawar.

"These tactics have been used several times in recent attacks – the terrorists fire shots against the security teams at the checkpoints, and then they enter their vehicle inside," he said.

Iqbal Khattaq, bureau chief of the Daily Times, told Al Jazeera that Pakistani intelligence agencies and police had been "tipped off" about a possible attack by militants from the South Waziristan and the Swat region of the NWFP.

"This building is also quite far away from the main road, so it was [thought to be] hard for bombers to carry out an attack similar to a bombing at a Marriott hotel [in  Islamabad] last year.

"American officials and diplomats were often seen at this hotel; we do not know whether any [US personnel] are among the dead and wounded."

The Pakistani military launched its offensive in the NWFP after Taliban fighters moved to within 100km of Islamabad, violating a deal to put the region's three million  people under sharia law in exchange for peace.

More than a dozen bomb attacks have claimed at least 100 lives across Pakistan since the Pakistani military began its offensive against opposition fighters in the NWFP in late April.

Peshawar has seen at least seven bombings in the last month, while Islamabad, the capital, has also been hit.