A bomb ripped through the main study hall of an Islamic school in north-western Pakistan on Tuesday, killing seven children and wounding scores more, police and rescuers said.

The bomb went off in the city of Peshawar when around 100 children aged between eight and 15 were taking early morning Koran lessons, local police chief Mohamed Ali Khan said.

A man entered the Islamic school at around 0800 hours in the morning and left an explosive-filled bag inside the hall, police officers said, citing footage from the surveillance cameras.

The bomb, which had ball bearings inside, hit almost everybody in the hall and created a huge crater, officer Khan said.  At least seven children had died so far and more than 65 were being treated at the city’s Lady Reading Hospital, said doctor Abdul Wahab.

Many children were in a critical condition, said Wahab, fearing the death toll might go up.Up to six kilograms of explosive material were used in the bomb, police official Madad Khan said.  

The area has been cordoned off and police was searching for the man who was seen leaving the bag in the school, Khan said.

The rescue operation has been completed and the dead bodies and injured people have been transported to the hospital, rescuer Bilal Faizi said.

A state of emergency has been declared at all city’s hospitals and police and other security agencies have been put on a high alert, said Kamran Bangash, regional information minister.

Islamist militants linked with the Pakistani Taliban stormed a military-run school in Peshawar in 2014, killing around 150 children in one of the country's deadliest attacks.

Militants from al-Qaeda, the Taliban and Islamic State extremist groups have killed around 70,000 people in Pakistan including politicians, security forces, activists and journalists since 2004.

A series of military offensives from mid-June 2014 pushed the militants into neighbouring Afghanistan, but they still have the capability of launching surprise attacks.