The bomb blast in central Oslo damaged a number of buildings, including the finance ministry and the government headquarters, but Prime Minister Jens Stoltenberg, was unhurt, according to his spokesperson.
"The prime minister is safe and he is not hurt," said Camilla Ryste, an official in Mr. Stoltenberg's office. The situation is "chaotic," she added.
Speaking on the phone to NRK TV, Mr. Stoltenberg said, "This is a serious a explosion and all available rescue personnel are at the scene to help the injured. My thoughts go to those who have been affected."
Oslo police officials said the explosion was caused by a bomb. Police Chief Thor Langli said during a press conference that the blast could have been caused by more than one device and that a car bomb could have been used, but that the police can't confirm other details yet. Mr. Langli also said Prime Minister Stoltenberg is safe and has been moved to a safe location.
"I was in no doubt that it was a bomb. The damage to the building structure was massive," said Sverre Rorvik Nilsen, a business reporter in Oslo, who witnessed the explosion.
"I was going to pass the front of the prime minister's office [and] when I was just around the corner a massive explosion shook everything around me and smoke could be seen billowing out from the prime minister's office," he said.
Police said they sent antiterror police to a youth camp outside Oslo after reports of a shooting there following the bomb blast at the government headquarters, the Associated Press reported.
The news site VG reported that a man dressed in a police uniform opened fire at the camp. It says several people were injured.
Oslo police chief Anstein Gjengdal said antiterror units were being sent to the camp at Utoya, outside the Norwegian capital.
He had no other information on that incident, which came hours after a bomb blast outside the government headquarters. Another Norwegian police officer said told NRK TV that they have received information that suggests the attacks were linked.
No on has yet claimed responsibility for the attack, which is the latest in series of incidents to hit Scandinavia.
In December a suspected suicide bomber blew himself up near a busy street in the center of Stockholm among Christmas shoppers.
In September, an Iraqi Kurd, one of three men arrested in July in the Oslo area and in the German city of Duisburg, confessed to planning an attack, with the target believed to be Jyllands-Posten, the Danish newspaper known for publishing controversial cartoons of the Prophet Muhammad.
The suspect was one of three men arrested when the Norwegian Security Service acted against a suspected terrorist cell operating in Norway.
Magnus Ranstorp, research director at the Center for Asymmetric Threat Studies at the Swedish National Defence College said Friday's events should be the context of September's arrests and the failed attack in Stockholm.
"What happened in Norway is what should have happened in Sweden," he said. Mr. Ranstorp suggest those who carried out today's attack could be part of wider network.
"Attacks of this scale are rarely carried out by individuals with a grudge, acting alone," he said.
Although Scandinavian countries have reputations as liberal havens, there is a long list of groups with grievances who could have carried out the lethal bombing in the centre of Oslo.
Strong al Qaeda offshoots exist in Norway and neighboring Sweden. The leaders of these groups considered Osama bin Laden a religious and philosophical guide, but have worked independently from his command for years.
Norway TV reported that a group called Helpers of the Global Jihad said "This is just the beginning of what will come," though the TV station said it's unclear that the group has taken responsibility
Inge Solheim, head of emergency planning at Oslo University Hospital, said 10 people with injuries, some serious, had come into the hospital and that he expected more to come.
"We are in a state of alert and prepared to receive more patients," he said. Mr. Solheim said roads to and from central Oslo have been closed down.
Oslo police said dead bodies remained in the government building.
Television images showed a body lying in a street littered with broken glass and a charred upturned vehicle.
A person at the scene said there was extensive damage to buildings up to 800 meters from the government building. "It looks like a war zone," the witness said. "There were windows blown out and broken in buildings far away from where the blast happened."
He said he could see six or seven ambulances in the street a few hundred meters away and a helicopter hovering in the sky. "I even heard the explosion myself and I live five kilometers away from the city center. I thought it was thunder."
Norway police has called for people to stay away from the city center and limit their usage of mobile phones. It said police, rescue services and medical staff were at the site for the explosion in large numbers.
"The police are working to grasp the magnitude of the damage," the statement said.—Neanda Salvaterra contributed to this article.