RAWALPINDI: An explosion rocked the compound of a four-star hotel just off a main boulevard in Pakistan's garrison city of Rawalpindi on Monday and there were reports of casualties, police said.

"According to initial reports the blast took place in the compound of the hotel. Our teams are there, they are updating us on the details," police officer Mohammed Akhlaq told AFP by telephone.

"Casualties are feared," said Akhlaq.

The Shalimar Hotel is off Mall Road, close to the upmarket Pearl Continental Hotel, not far from Pakistan's army headquarters, where 10 gunmen kept up a nearly 24-hour siege last month and about 15 minutes' drive from the airport.

Witness Sajid Khan told the private Dunya TV station that he was driving in the area when he heard the explosion.

"It was a huge blast. It was close to the General Post Office Chowk (roundabout) on Mall Road. I saw smoke rising from one of the buildings. I sped up to escape," Khan said.

A surge in militant attacks has battered Pakistan in recent weeks, leaving more than 300 people dead last month alone as the military presses a major offensive against the Tehreek-e-Taliban Pakistan movement in the tribal belt.

The last attack in Rawalpindi saw militants besiege the army headquarters, holding more than 40 hostages and deeply embarrassing the military. The October 10-11 attack left 23 people dead, including three hostages.