At least 11 people were killed and 70 wounded when a truck bomb exploded at the Pearl Continental Hotel in Peshawar, the capital of Pakistan's North West Frontier Province.
Initial reports says a truck drove up to the parking lot of the luxury hotel, which is frequented by westerners, diplomats, businessmen and top politicians. Witnesses say gunfire was heard and then, a huge explosion.
Dozens of vehicles were destroyed and television pictures showed the side of the hotel was sheared off.
Pakistani politicians from the region were in the hotel, along with United Nations officials who are assisting relief operations for millions of people displaced by the army offensive against Taliban militants in the nearby Swat Valley.
Former Interior Minister and chief minister in North West Frontier Province, Aftab Sherpao, told Pakistani media the attack was clearly designed to pressure the government as it tries to drive Taliban insurgents out of the region.
"We were expecting this and I think every Pakistani, even the law enforcement agencies, were expecting this," said Aftab Sherpao. "Because these are landmarks and such, like incidents do have a big impact on the public."
Peshawar has been hit repeatedly by militant attacks. The most recent occurred on May 28 when two bombs went off at a crowded market and gunmen attacked a police post, altogether killing at least 14 people.
Taliban leaders in Pakistan have vowed to avenge the government's operation against Islamic fighters in Swat Valley, where key towns and cities, including the capital, have been cleared of militants.