Police in Norway say the blast - which happened just after 2.30pm today GMT - was caused by a bomb.
There are now reports of an attack on a children's summer camp in Utoya Island, 500 miles north of Oslo. Early reports indicate the camp is a meeting of the youth group of the Labour party - the biggest part in the governing coalition.
Police are also saying this afternoon the office of broadcaster TV2 has been sealed off because of a suspicious package.
The wreckage of a car lies outside government buildings in the centre of Oslo. Police have confirmed the blast was caused by a bomb
The tangled wreckage of a car was seen outside one Government building leading to suggestions it could be have been a car bomb. Officers are investigating whether it was a fertiliser nitrate device.
The Prime Minister Jens Stoltenberg was not in the city at the time and is unharmed, it has been reported.
Norwegian broadcasters have confirmed one death just before 4pm however early pictures show at least two dead bodies.
At least fifteen people have been injured from flying glass.
The Prime Minister Jens Stoltenberg was not in the city at the time and is unharmed, it has been reported
Victims receive treatment outside government buildings in the centre of Oslo as survivors trudge through the wreckage
Debris: Police and rescue workers tend to a wounded person caught up in the blast
A man lies injured in the road amid wreckage from the blast as emergency service personnel rush to help him
Rescue officials tend to a wounded man lying in the street moments after the blast
The blast blew out most windows on the 17-storey building housing Stoltenberg's office, as well as nearby ministries including the oil ministry, which was on fire.
Heavy debris littered the streets and a tall plume of brown smoke blew over the city centre. Witnesses also reported seeing a young man with a bleeding leg being helped away from the area.
All roads into the city centre have been closed, and security officials evacuated people from the area, fearing another blast, local journalists are reporting.
Fortunately, it was a public holiday and the offices were less busy than a normal weekday.
Debris covers the area outside a building in the centre of Oslo with hundreds of windows shattered
A Reuters correspondent counted at least eight injured people. Norwegian news agency NTB said that Stoltenberg was safe in the blast, which happened around 3:30pm.
'It exploded - it must have been a bomb. People ran in panic and ran. I counted at least 10 injured people,' said Kjersti Vedun, who was leaving the area.
An NRK journalist, Ingunn Andersen, said the headquarters of tabloid newspaper VG had also been damaged, according to AP.
'I see that some windows of the VG building and the government headquarters have been broken. Some people covered with blood are lying in the street,' she said.
'It's complete chaos here. The windows are blown out in all the buildings close by.'
Eyewitness Craig Barnes was behind the Government building that was struck.
He told Sky News: 'I'm still shocked, I can't believe it. I've got no words, I'm shaken up. Quite a few people are injured. It has shocked everyone and its a major holiday here. Everyone leaves here for two weeks from today.'
Passersby rush to help a a victim of the blast lying injured in the street
NATO member Norway has sometimes in the past been threatened by leaders of al Qaeda for its involvement in Afghanistan. It has also taken part the NATO bombing of Libya, where Muammar Gaddafi has threatened to strike back in Europe.
However, political violence is virtually unknown in the country.
David Lea, Western Europe analyst, at Control Risks said: 'It's very difficult to tell what has happened. There certainly aren't any domestic Norwegian terrorist groups although there have been some al Qaeda-linked arrests from time to time.
'They are in Afghanistan and were involved in Libya, but it's far too soon to draw any conclusions.'
Norway has about 400 troops currently serving in Afghanistan
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