At least 16 people were killed when two attackers shot security guards and then slammed an explosives-laden car into the building, turning large parts of the five-star Pearl Continental Hotel to rubble in what is suspected of being a Taliban revenge attack.

The United Nations said the dead included two of their employees -- a Serbian national who worked for the refugee agency UNHCR, and a Filipino who worked for children's agency UNICEF.

Dozens of aid workers were staying at the opulent hotel before heading out to refugee camps in North West Frontier Province, where Pakistan launched military action in three districts on April 26 to try to crush Taliban rebels.

The air and ground assault in Swat, Lower Dir and Buner has sent up to two million people fleeing their homes.

Possible revenge for Swat Valley offensive

The current campaign centered on Swat was launched when Taliban fighters advanced to within 100 kilometers (60 miles) of Islamabad, flouting a deal to put three million people under Sharia law in exchange for peace.

The offensive has the backing of the United States and reportedly enjoys broad popular support in Pakistan after a spate of worsening Taliban-linked attacks which have killed more than 1,960 people since July 2007.

Tuesday's bombing was the seventh deadly blast in Peshawar in a month. More than 155 people have been killed in similar attacks across Pakistan since the anti-Taliban military offensive began.

A top provincial official said the massive blast at the Pearl Continental was likely to be the latest retaliatory attack by Islamic militants reacting against the six-week offensive against them..

"The blast is a reaction to the army offensive in Swat and Malakand. The possibility of this type of terrorist attack cannot be ruled out in future," North West Frontier Province information minister Mian Iftikhar Hussain said.

Foreign nationals among the wounded

Police official Abdul Ghafoor Afridi told AFP that 57 people were injured, including a German and other foreign nationals who have been taken from Peshawar, the provincial capital, to Islamabad for treatment.

"The number of casualties could rise as we fear that some people are still trapped under the debris," Afridi said. "One portion of the hotel was totally destroyed. Three people including a manager of the hotel are missing and we fear they are under the debris."

Early reports suggest at least two men dressed as security guards shot their way through a security barrier and into the hotel compound, where they managed to detonate about 500 kilograms of explosives packed in a pick-up truck.

"It was such a huge and powerful blast that the engine flew up to the fourth floor of the hotel," police official Shafiullah Khan told reporters.

In late May, 24 people were killed in a similar gun and suicide car bomb attack on a police building in eastern Lahore -- an attack claimed by Pakistan's Tehreek-e-Taliban (TTP), which warned of more "massive attacks."

No group has yet claimed responsibility for Tuesday's hotel blast.

nda, AFP/ap/dpa

Editor: Sonia Phalnikar