Over a hundred people have been wounded and more than a dozen killed in a powerful explosion at the Afghan capital in the early hours of Wednesday.

A powerful vehicle-borne bomb exploded in the middle of the Afghan capital, Kabul, sending clouds of black smoke into the sky above the presidential palace and foreign embassies.

The explosion, one of the deadliest in Kabul and coming at the start of the holy month of Ramadan, occurred close to the fortified entrance to the German embassy on a road usually choked with traffic at that time of day.

"It was a car bomb near the German embassy, but there are several other important compounds and offices near there too. It is hard to say what the exact target is,spokesperson to the police told Reporters.

The blast, which shattered windows and blew doors off their hinges in houses hundreds of yards away, was unusually powerful, with some reports saying it was caused by explosives concealed in a water tanker.

A public health official said at least 80 people had been killed and more than 350 wounded. The victims appear mainly to have been Afghan civilians and there were no immediate reports of casualties among foreign embassy staff.

The French and Chinese embassies were among those damaged, the two countries said, adding there were no immediate signs of injuries among diplomats.

There has been no claim of responsibility for the explosion.