Some residents said the blast in Thenia appeared to be a suicide attack, the tactic used in a devastating twin bombing in the capital of the north African country on December 11 that killed at least 41 people including 17 U.N. staff.

The bombing on Tuesday in Thenia 55 km (34 miles) east of the capital ripped much of the front wall off a three-storey police building and badly damaged nearby shops and a restaurant.

"The explosion happened at 6.25 a.m. (5:25 a.m. British time) and thank God it didn't happen at 08.00 a.m. or we would have been killed without a doubt," a man who gave his name as Slimane told Reuters. His butchers shop was among the damaged buildings.

On January 2, an explosives laden car was rammed into a police station in Naciria, about 120 km (75 miles) east of Algiers, killing four policemen and wounding 20 people.

Al Qaeda's north African wing claimed that attack, as well as the December 11 Algiers double bombing.

Algeria is recovering from more than a decade of violence that began in 1992 when the then army-backed government scrapped legislative elections that a radical Islamic party was poised to win. The authorities had feared an Islamic revolution.

Up to 200,000 people are estimated to have been killed.

Violence in the oil- and gas-exporting nation has fallen since then, but in the past 12 months it has regained a little of its former intensity, particularly in the mountainous Kabylie region.

Algerian Islamist rebels aligned themselves with al Qaeda last year and began copying its tactics by carrying out a string of high-profile urban suicide bombings.

The group was previously called the Salafist Group for Preaching and Combat and had preferred to ambush government security forces from its main bases in the remote forests of Kabylie.

Thenia lies on the edge of the Kabylie region.

Maghreb Al Qaeda said the December bombing of the U.N. offices and a court building was aimed at "the slaves of America and France".

Maghreb al Qaeda said it was also behind two suicide bombings that killed 57 people in September. One was a failed attempt to assassinate President Abdelaziz Bouteflika.