There was no immediate claim of responsibility for Tuesday's bombing in the northwestern city, near the border with Afghanistan, which has long been plagued by Islamist violence.

"Unknown people planted explosives in a plastic bag," said a police officer who declined to be identified as he is not authorised to speak to media.

Peshawar police chief Mohammad Ali Gandapur told Reuters the bomb contained up to 6kg of explosives.

Though militant violence in the city, and in Pakistan in general, has fallen over recent years, there has been an increase in attacks on the security forces this year in Khyber Pakhtunkhwa province, of which Peshawar is capital.

Some of the attacks have been claimed by the Pakistani Taliban.

Tariq Burki, director the city's Lady Reading Hospital, said earlier that four of the seven dead were children but later said four children were wounded and all the dead were adults.

Five of the 83 wounded were in critical condition, he said.

The madrassa is largely for adult students and many were studying when the blast happened, said city resident Abdul Rahim, whose 27-year old cousin was among the wounded.

"He told us they were attending a class when the blast took place," Rahim said.

Australian Associated Press