In the worst ever terror strike in Pakistan, at least 139 people were killed and over 500 others injured when a suicide bomber targeting former Prime Minister Benzair Bhutto blew himself up during her homecoming procession here late on Thursday night but she escaped unhurt.

The bomber struck just 10 to 15 ft away from the especially refurbished armoured truck in which 54-year-old Bhutto was travelling along with close aides as the procession which was moving towards the tomb of Pakistan's founder Mohammad Ali Jinnah reached the Karsaz area of this port city at about midnight.

A grenade exploded seconds before the suicide bomber struck ripping through a police van in front of Bhutto's truck, which was also damaged, killing mostly supporters of Pakistan People's Party leader, who had thronged the streets in hundreds and thousands to greet her.

Bhutto, who was on her way to Jinnah mausoleum after arriving in Pakistan following eight years in self-exile, had climbed down into the truck after waving to the crowds when the attack took place. She was immediately rescued and whisked away to her residence, Bilawal House, by security personnel and PPP workers, as people ran helter-skelter fearing for their lives.

"Bhutto is safe and was taken to her home here," PPP spokesman Farhatullah Babar said.

Sindh Governor Ishrat-ul-Ebad Khan said Bhutto was the "prime target" but she was safe because of the security.

It is a suicide attack, Railway Minister Sheikh Rashid said after one of the deadliest bombings in Pakistan's history.

Interior Ministry confirmed 70 people dead but hospital sources said nearly 139 have been killed and over 500 injured.

Bhutto has demanded the sacking of the chief of the Intelligence Bureau for failing to prevent the attacks while President Pervez Musharraf has described the bombings as a "conspiracy against democracy" and appealed for calm.

The blasts came despite massive security arrangements, with over 20,000 security personnel being deployed to protect the PPP leader after local Taliban leader Baitullah Mehsud warned that suicide bombers would be waiting to "receive" her.

City police chief Azhar Farooqi said a grenade was thrown in the crowd to create panic just before the suicide bomber blew himself.

Bhutto had been waving to the crowds for hours while standing on the truck and the explosion occurred destroying at least two police vans just as she had just climbed down, a Karachi policeman man.

People were seen moving in daze or frantically looking for their loved ones with dismembered bodies strewn around on the road.

Moving amid pools of blood, shattered glass and charred tyres and vehicles, people carried the injured on their shoulders to the nearest vehicle to transport them to hospitals, which struggled to attend to the rush.

The government of Sindh province announced that all schools would remain closed on Friday.

"It was an act of terrorism targeting Benazir Bhutto and aimed at sabotaging the democratic process," Interior Minister Aftab Sherpao said.

Sherpao did not say who might be responsible, while Bhutto's husband Asif Ali Zardari alleged a Pakistani intelligence agency was behind the attack.

"We blame one intelligence agency and we demand action against it... it is not done by militants, it is done by that intelligence agency," Zardari, who stayed behind in Dubai, told Geo News.

"It is a pattern that would suggest the attack was planned meticulously and conducted expertly -- certainly not by a novice," he said.

The attack came hours after a teary-eyed Bhutto had set foot on her home soil for the first time after 1999, when she fled Pakistan to escape arrest on graft charges.

Musharraf had promulgated an ordinance early this month that allowed dropping of corruption charges against Bhutto, paving the way for her return apparently under a power-sharing deal.

"We are still fighting a dictatorship," Bhutto, the first woman ever to lead an Islamic nation, had said on arrival.

"We want to isolate extremists and build a better Pakistan."

Bhutto cancelled plans to address supporters at a rally on Thursday.

The United States led global condemnation of the attack.

"There is no political cause that can justify the murder of innocent people.... The United States condemns the violent attack in Pakistan and mourns the loss of innocent life there," White House national security spokesman Gordon Johndroe said.

Australia said the attack bore the hallmarks of al-Qaeda.

"It is a reminder of the evil of al-Qaeda," Prime Minister John Howard said, adding "it is a reminder of how important it is not to concede a victory to them in Iraq or in Afghanistan."

Expressing shock over the attacks, UN Secretary General Ban Ki-moon said he "trusts that all political forces will act together to strengthen national unity."

The local media said over 500 people were injured in the twin blasts.

"It is the biggest toll we have in this terrorist attacks.... Law and order enforcement agencies are on high alert throughout the province and we are keeping watch on the situation," the governor said.

"It was an act of terrorism targeting Benazir Bhutto and aimed at sabotaging the democratic process," Interior Minister Aftab Sherpao said.

Moving amid pools of blood, shattered glass and charred tyres and vehicles, people carried the injured on their shoulders to the nearest vehicle to transport them to hospitals which struggled to attend to the rush.

Heaps of footwear and debris of destroyed vehicles lay scattered at the blasts site where Bhutto's badly burnt vehicle bore a grim reminder of the ferocity of the attack.

The roads, which were choked with some 2.5 lakh PPP workers, emptied rapidly after the explosions. The mood on the streets swiftly turned to anger, with many chanting anti-government slogans.

Angry protesters tried to set afire a petrol pump during a protest. The government of Sindh province said all educational institutions in Karachi and Larkana, Bhutto's hometown, would remain closed on Friday.

City police chief Azhar Farooqi said "necessary measures" were adopted to protect Bhutto but the blasts occurred despite these precautions.

"We had a contingency plan to evacuate the VIP. That was put into action immediately and she was taken to Bilawal House," the police chief said, adding a special team will probe the attack.

The blasts came despite massive security arrangements with over 20,000 security personnel being deployed to protect the PPP leader after local Taliban leader Baitullah Mehsud warned that suicide bombers would be waiting to "receive" her.

The former premier was unfazed by these threats and had said she believed no "true Muslim" would attack a woman.

Bhutto, whose comments about cooperating with the US to tackle terrorism in Pakistan have angered militants, said she wanted to "isolate extremism".

President Pervez Musharraf and Prime Minister Shaukat Aziz condemned the blasts and said the government was determined to trace those responsible for the attacks and give them "exemplary punishment".

As Bhutto's motorcade made its way from Jinnah International Airport, where she had arrived in an Emirates flight from Dubai on Thursday, to the mausoleum of Pakistan's founder Muhammad Ali Jinnah, it took nine hours to cover a distance of about seven kilometres.

At one point, it covered just one kilometre in over three hours due to the large number of people crowding the roads.

A rally that was to be addressed by Bhutto at the mausoleum was cancelled after the attack.