Ambulances rushed to the location of the blast
A Taliban suicide bomber has attacked the Indian embassy in Kabul, killing at least 17 people in a second attack on the building in little over a year.
Afghan officials say a car bomber blew himself up near the Indian embassy and the Afghan interior ministry.
The Taliban said it carried out the attack and the embassy was the target.
Kabul has been attacked regularly in recent months, and the Indian embassy was itself bombed in July 2008, with dozens of people killed.
Most strikes in the capital target foreign forces or government offices - but civilians are also often killed.
More recently, six Italian soldiers were killed last month in a bomb attack on a military convoy.
The latest blast hit at 0827 local time (0353 GMT), as residents were arriving to work.
AT THE SCENE
Martin Patience, BBC News, Kabul
The morning rush hour was brought to an instant halt as a car-bomb ripped through the city.
"I heard a gigantic explosion," Mohammed Naim, a local painter who runs a gallery, told the BBC.
"Everything in my shop fell down on me. When I got out onto the street, I saw dead bodies and injured people all around me. It was horrific."
The insurgents appear to be sending a clear message - we can strike anywhere in Afghanistan.
India's Foreign Secretary Nirupama Rao said the suicide bomber "came up to the outside wall of the embassy with a car loaded with explosives".
Television pictures showed charred vehicles at the site and ambulances speeding to the location.
An eyewitness, Habib Jan, told the BBC the victims were civilians.
"A [Toyota] Corolla car was parked in front of the Indian embassy. It was rush hour, about 10 minutes after I arrived at the office when we heard an explosion.
"There were lots of workers cleaning the street - most of them have been killed."
Nirupama Rao told reporters that she believed the suicide bomb was directed against the Indian embassy.
In July 2008 a suicide bomber rammed a car full of explosives into the gates of the embassy, killing dozens of people and injuring more than 140.
DEADLY KABUL ATTACKS
Sept 2009: Suicide bomber kills two civilians at the main airport
Aug 2009: Suicide car bomber kills 10 people in an attack on a convoy of Western troops.
Aug 2009: Suicide bomb outside Nato headquarters kills seven people
Feb 2009: Suicide attackers kill 19 people in three government buildings
Jul 2008: Suicide car bomber kills more than 50 at Indian embassy
India has a strong relationship with Afghanistan, building and managing infrastructure projects in what analysts say is a concerted effort to minimise Pakistani influence in the country.
Analysts say the strength of India's relationship with Kabul has made it a key target for the country's Taliban militants, who have historic links with Pakistan.
Afghan officials linked last year's bombing to an "active intelligence service" - thought to be Pakistan.
Taliban spokesman Zabiullah Mujahid said in an online statement that Thursday's attacker was an Afghan man who blew up his vehicle outside the embassy.
The Afghan Interior Ministry said 17 people had died and 63 had been wounded in the latest attack. Fifteen of the dead were Afghan civilians and one was an Afghan police officer.
The BBC's Martin Patience, in Kabul, says there appears to be a lot of damage at the scene - now sealed off - and that municipal workers have moved into the area with brooms to begin a clean-up.
This is thought to be the fourth bomb attack in Kabul since August.
Until the summer, the Afghan capital was regarded as relatively secure, but that is changing, our correspondent says.
Insurgents are increasingly targeting the capital because of the publicity it attracts.
Militants seem to be able to attack at will in what should be one of the most secure areas of the country, our correspondent adds.
Edrees Kakar, an office worker and freelance journalist, who heard the latest explosion, told the BBC: "These bomb attacks are happening so frequently that people no longer feel safe.
"People are leaving their homes less and less. We are frustrated and feel we are not getting sufficient help from the international community."