An explosion killed at least 10 people on Thursday in a busy cafe in the Moroccan city of Marrakesh, a favourite destination for foreign tourists, a Moroccan official source said.

There was no formal comment on the cause of the blast from the authorities, but the official source said it appeared to have been caused by gas canisters catching fire inside the cafe.

A Reuters photographer who was at the scene of the blast in the city's main Jamaa el-Fna square said he saw rescue workers pulling dismembered bodies from the Argana cafe. The square is usually thronged with tourists and vendors.

There was no immediate word on whether there were any foreigners among the dead or injured.

"I heard a very loud blast in the square. It occurred inside Argana cafe. When I approached the scene, I saw shredded bodies being pulled out of the cafe," the Reuters photographer said.

Morocco's official MAP news agency said an investigation was underway to determine the cause of the explosion.

"At least 10 people were killed. They include clients and cafe employees," said the official source, who did not want to be identified.

"The blast was caused by large gas canisters that caught fire ... Several people were wounded," he said.