One person was killed and twenty people were wounded when an explosion ripped through a bus outside Jerusalem's central bus station on Wednesday, radio Israel reported.
Israeli officials and police confirmed the explosion was caused by a bomb, which was apparently left next to a public phone by a bus stop.
"The bomb was inside a bag which was left at the bus stop," Internal Security Minister Yitzhak Aharonovitch told reporters at the scene.
The blast, which shook buildings hundreds of metres away shortly after 3:00 pm (1300 GMT), hit the 174 bus as it stopped to pick up passengers at a stop between the central bus station and the ICC conference centre, both of which lie at the western entrance to Jerusalem.
"There are 20 people injured, three of whom are in serious condition, while another four or five are moderately injured," said emergency services spokesman Zaki Hellert.
An AFP correspondent at the scene saw people lying on the floor covered in blood, and many cars and buses with shattered windows.
Medical officials said many of the wounded were suffering from shrapnel wounds.
The blast occurred as tensions ran high along the Gaza border, where there has been a significant increase in Palestinian rocket attacks and retaliatory Israeli air strikes, ramped up tensions between Israel and Gaza's Islamist Hamas rulers.
On Tuesday, eight Palestinians, two of them minors, were killed in two separate Israeli attacks on Gaza City.
Four of them were militants from the armed wing of the Islamic Jihad movement, the Al Quds Brigades, who vowed to step up its attacks on Israel.