"The bus was carrying around 40 people, most of them government employees, from Peshawar to Charsadda when a huge blast took place inside the bus at Daudzai area of Peshawar. I believe the bomb was planted inside the bus," senior police Tahir Ayub told NBC News.

Peshawar borders Pakistan's semi-autonomous ethnic Pashtun regions along the Afghanistan border. Islamist militants have found refuge there despite a series of military offensives over the past few years.

Pakistan's decision to convict a doctor who helped the U.S. track down Osama bin Laden was met with outrage in the U.S. NBC's Andrea Mitchell reports.

The Pakistani Taliban, the Afghan Taliban, al-Qaida and affiliated militant groups are entrenched in the tribal regions and take advantage of the porous border to launch attacks against NATO and Afghan forces in Afghanistan.

NBC News' Mushtaq Yusufzai in Pakistan and Reuters contributed to this report.