Three persons, including a policeman, were killed and over 20 others injured in a bomb blast near a police station in the north-western Pakistani city of Mardan on Friday.

Police said they believed the bomb was hidden in a car parked near the police station.

The blast, which occurred shortly before 6 am and was heard from several kilometres away, caused extensive damage to the boundary wall of the police station building and a nearby hotel.

Officials said they feared the death toll could rise as some of the injured were in a serious condition.

Several shops in a market near the police station in Mardan, located about 60 km from the North West Frontier Province capital of Peshawar, were also damaged in the blast.

An assistant sub-inspector was among the dead and 10 policemen were among the injured.

Ambulances rushed the injured to hospital while rescue workers scoured the damaged shops to ensure that no one was buried under the rubble.

This was one of the first major bomb attacks since the formation of Pakistan's new coalition government after the February 18 general election.

The government led by the Pakistan People's Party has initiated parleys with militant groups, including the local Taliban, to usher in peace in the country's restive north-western tribal areas.