A remote-controlled bomb blast killed 35 people and wounded more than 60 others on Tuesday in the deadliest attack in months in the Taliban-hit tribal region of northwest Pakistan.

The explosion took place in a market in Jamrud, one of the towns of the troubled Khyber tribal region, which also used to serve as the main supply route for NATO forces operating in Afghanistan.

Officials said the dead included two children, aged 9 and 10 years, and three tribal policemen.

There was no immediate claim of responsibility for the bombing but local residents suggested it was a tribal dispute, as most of the victims were members of the Zaka Khel tribe who oppose the local warlord, Mangal Bagh.

Trails of blood could be seen around the site of the blast, which had left a large crater in the road, a reporter said.

"The total number of deaths in the blast is 35 while 69 people were wounded," a senior administration official, Shakeel Khan Umarzai, told the media, adding 11 were in critical condition.

Another top official in Khyber, Mutahir Zeb, said the target of the attack was not immediately clear.

"According to initial information, it was a remote-controlled device planted in a passenger pickup van," he said.

The burnt out wreckage of at least 15 cars littered the scene next to the shattered glass of at least nine destroyed shopfronts.

One of the wounded, 26-year-old Zulfiqar Khan, a van driver with a broken left shoulder, said he had been washing his car when the explosion hit.

"I fell at least three metres away from my car because of the impact of the blast," he said. "As I fell on the ground with severe pain in my left shoulder, pieces of human flesh hit my body."

Another man, Ameenullah, 38, who goes by just one name, spoke to AFP from his hospital bed where he was being treated for head wounds and three broken fingers.

"I was driving my car when a powerful blast rocked the area which over-turned my car. When I regained consciousness, I found myself on the hospital bed," he said.

The United States denounced the bomb blast. "The United States strongly condemns today's bombing at a marketplace in Jamrud, in the Khyber agency," State Department spokeswoman Victoria Nuland told reporters.

"By callously targeting innocent peoples, the extremists who planned and perpetrated this attack are just showing their contempt for the value of human life," she said, offering condolences to the victims' families and friends.

"We remain deeply committed to working with Pakistan to address these kinds of terrorist threats and the results of violent extremism," she said.

Pakistan's remote and lawless northwestern region is a stronghold of Taliban and Al-Qaeda operatives and other Islamist militants opposed to the government.

Insurgents largely based in the tribal border lands have carried out bomb and gun attacks killing nearly 4,800 people across Pakistan since July 2007.

But the market bombing was the first major Islamist militant attack in Pakistan since September 15 when a suicide bomber killed 46 people, targeting anti-Taliban militia at a funeral in the northwestern district of Lower Dir.

Pakistan has battled a homegrown insurgency for years, with more than 3,000 soldiers killed in the battle against militancy.

On Monday Pakistani authorities recovered the bodies of 10 soldiers in an exchange of bodies with Taliban militants following a clash two weeks ago in the tribal belt.

An official with the military's media wing said the soldiers had been missing in Orakzai district since December 21 when rebels attacked a checkpost and killed 13 others.

That exchange came four days after the corpses of 15 members of Pakistan's paramilitary Frontier Constabulary were found in the northwestern town of Shawa, in North Waziristan tribal region near the Afghan border, almost two weeks after they were kidnapped.

There were about 120 bomb attacks in Pakistan in 2011, up on the 96 bomb blasts in 2010, but far lower than violence in 2009 when there were 203 bombings across Pakistan, according to an AFP tally.

The latest attack comes as the northwest border crossing for NATO supplies to foreign troops fighting in neighbouring Afghanistan remains closed, after NATO air strikes on November 26 killed 24 Pakistani soldiers.

Pakistan rejected the results of the military coalition's investigation into the incident and said the strikes had been a deliberate act of aggression, leaving relations floundering between the US and Pakistan.