A car bomb tore through a packed market in Peshawar on Wednesday, killing 92 people and trapping casualties under pulverised shops, in one of Pakistan's deadliest attacks.

The explosion detonated in a crowded street in the Meena Bazaar of Peshawar, one of the most congested parts of the volatile northwest city, sparking a huge blaze and ending in carnage routine shopping trips for scores of people.

The attack underscored the scale of the militant threat in Pakistan just hours after US Secretary of State Hillary Clinton arrived in the capital Islamabad for three days of talks with political and military leaders.

"There was a huge blast. There was smoke and dust everywhere. I saw people dying and screaming on the road," witness Mohammad Siddique told AFP.

Angry flames leapt from burning wreckage and smoke billowed in the air as a building collapsed into dust and rubble. Police evacuated panicked residents from the smouldering wreckage and firemen hosed down the flames.

"It was a car bomb. Some people are still trapped in a building. We are trying to rescue them," bomb disposal official Shafqat Malik told reporters.

"We have 92 dead bodies and we have registered 217 injured people. Nineteen of the dead are women and 11 are children. All the dead are civilians," Doctor Zafar Iqbal told AFP at Peshawar's main Lady Reading Hospital.

People asked to donate blood

A hospital official outside the casualty wing made a public announcement, appealing for people to donate blood as doctors spoke of harrowing scenes.

"There are body parts. There are people. There are burnt people. There are dead bodies. There are wounded," said Doctor Muslim Khan.

Rescue workers and government officials had warned that casualties were trapped under collapsed shops at the bomb site, where a large blaze, a toppled building and the narrow streets hampered the relief effort.

"I have counted 90 dead bodies, but I fear the death toll may rise even further. Some of them are children and women," Mohammad Gul, a police official at the hospital, told AFP.

The area was one of the most congested parts of Peshawar and full of women's clothing shops and general market stalls popular in the city of 2.5-million.

"A building structure has collapsed... People are trapped in the fire and buildings. This is the most congested area of the city," Sahibzada Mohammad Anees, a senior local administrative official, told TV channel Express.

Peshawar, a teeming metropolis, is a gateway to Pakistan's northwest tribal belt, where the military is pressing a major offensive against Pakistani Taliban militants blamed for some of the worst of the recent carnage.

Tensions have soared across Pakistan following a spike in violence blamed on Taliban and al-Qaeda-linked extremists in which more than 240 people have died this month, raising acute US concerns.

A wider two-year bombing campaign unleashed after Pakistani troops besieged a radical mosque in Islamabad has killed more than 2330 people.

That campaign has stepped up in the last year since at least 60 people perished when a suicide bomber rammed a truck bomb into the gates of the five-star Marriott hotel in Islamabad on 20 September 2008.