JOIN USThe explosion occurred this morning near the privately-run school in Nauthia town, a congested neighbourhood within Peshawar cantonment, they said.
The dead included a passer-by and the owner of a donkey cart. The condition of two injured persons was described by officials as critical.
The injured were taken to Lady Reading Hospital.
The bomb, which contained five kilograms of explosives, was triggered by remote control, Special Superintendent of Police Muhammad Ejaz Khan told reporters.
Other officials said the casualties would have been higher had the bomb exploded half an hour later, when the students began arriving at the school.
Two suspects were arrested by police near the site of the blast and taken to an undisclosed location for interrogation.
No group claimed responsibility for the blast.
Prime Minister Yousuf Raza Gilani condemned the terrorist attack and said such cowardly acts targeting innocent citizens, particularly children, "explain the ideology of the terrorists".
He asked the Khyber-Pakhtunkhwa government to ensure the best medical treatment of the injured and directed security agencies to enhance vigil on the activities of extremist elements.
Khyber-Pakthunkhwa Senior Minister Bashir Ahmed Bilour, who supervised rescue operations at the site of the blast, told the media that the attack was part of a plot to create unrest among people.
Militants will not be allowed to shatter the government's firm resolve to wipe out militancy and terrorism, he said.
Deccan Herald is on WhatsApp Channels| Join now for Breaking News & Editor's Picks