The police station, where the office of the Criminal Investigation Department, which also investigates militancy, is located, was destroyed in the blast, a Reuters witness said.
Residents said the explosion rattled windows throughout town. Television showed police and soldiers cordoning off the affected district.
Two police officers were killed and 19 were wounded in the early morning attack, hospital officials said.
"The car was packed with explosives, it hit the gate of the police station," said senior superintendent of police Ejaz Khan.
Rescue officials said death toll could rise as several people were believed to be trapped in the rubble.
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