PESHAWAR, Pakistan (AFP) – A suicide attacker and suspected car bomb caused carnage in a busy Pakistani market outside a government office on Friday, killing 55 people and burying victims under pulverised shops.

The devastation struck Yakaghund town in the district of Mohmand, one of seven that make up Pakistan's northwest tribal belt that Washington has branded a global headquarters of Al-Qaeda and the most dangerous place on Earth.

It was the deadliest attack in nuclear-armed Pakistan since gunmen wearing suicide vests stormed prayer halls belonging to the minority Ahmadi community in the city of Lahore in May, killing at least 82 people.

A Taliban and Al-Qaeda-linked bombing spree across Pakistan has killed around 3,500 people in three years since government troops besieged a radical mosque in the capital Islamabad in July 2007.

Witnesses said a huge explosion damaged an administration office, shops, a jail and other buildings in the small town not far from the border with Afghanistan, where 140,000 US-led foreign troops are fighting the Taliban.

Wounded Raj Wali, 23, a labourer who was working on a nearby road at the time of the blast, said he suddenly felt a massive blow to his back.

"I turned round and saw the area engulfed in smoke. People were crying. I also saw body parts scattered near the blast site," he said.

Rescue workers were shifting through the debris of partially collapsed buildings and there are fears that the death toll could rise if more bodies are pulled out of the wreckage.

"There are 55 confirmed dead. Another 104 have been injured. They include major and minor injuries. The death toll may go up as there are seriously injured people," local administration official Rasool Khan told reporters.

"Rescue work is also going on to recover people trapped in the debris."

Khan said two women and four tribal policemen were among the dead, adding that dozens of shops had been flattened.

"We suspect that there were two blasts. One was a suicide attack on a motorbike. We have also found the wreckage of a car. It indicates that a car bomb was detonated with a remote control.

"The target is not clear but it could have been the local administration and members of a peace committee who come to my office for routine weekly meetings on Fridays," Khan told AFP.

At least 28 prisoners held for petty crime escaped after the explosives brought down an outer wall of a local jail.

Administration official Maqsood Ahmed said the attacker had struck as people gathered for the distribution of free wheelchairs and non-food items.

Although there was no immediate claim of responsibility, immediate suspicion fell on Islamist militant groups which have carved out havens in the remote and craggy mountains of Pakistan's tribal belt outside direct government control.

The Islamic republic is on the frontline of the US war against Al-Qaeda and the Pakistani military are bogged down fighting homegrown Taliban in the northwestern border areas.

Hugging the border with Afghanistan, where US and NATO allies are trying to end a nearly nine-year war, northwest Pakistan has suffered a wave of bombings causing mass casualties and insurgency, fanning fears about regional stability.

Pakistani leaders this week called for a landmark national conference to develop a strategy to counter the Islamist militant threat after a twin suicide attack killed 43 people at a shrine in Lahore on July 2.

In a rarity for the fractious world of Pakistani politics, the government said all major parties would be invited to the conference to find ways to eradicate terror and curb the problems of militancy.

The details and date of the possible conference have not been made clear.

Interior Minister Rehman Malik has said sectarian militant groups based in the central Punjab province, Lashkar-i-Jhangvi and Sipah-e-Sahaba, are colluding with Taliban and Al-Qaeda to recruit footsoldiers.

Young men were sent to training camps in the tribal belt and dispatched as bombers and militant cells back to Punjab and other cities, officials say.

Pakistani security forces have fought in the tribal belt and parts of the northwest for years, but deadly clashes are still largely a daily occurrence.