A powerful car bomb exploded near the ruling Baath party headquarters in the Syrian capital on Thursday, killing at least 31 people, wounding dozens and leaving a trail of destruction, a watchdog said.

Images of charred bodies lying next to mangled vehicles were broadcast by state television channel Al-Ekhbariya, which said children among those wounded, as the blast occurred near a school the central Damascus district of Mazraa.

"At least 31 people were killed and dozens wounded, the majority civilians," said the Syrian Observatory for Human Rights, while the State news agency SANA reported 16 killed and 200 hurt in what it said was a suicide bombing.

Shortly after the mid-morning blast, two mortars were fired at a military headquarters in Damascus, Al-Ekhbariya and the Observatory both reported, without giving information on casualties.

The car bomb exploded at the 16 November Square near the Al-Iman mosque, next to the head offices of the Baath party, which has been in power for half a century.

Buildings were shattered by the blast, which sent thick black smoke billowing across the capital's skyline and all roads in the area were quickly sealed off, an AFP correspondent said.

Ambulances sirens rang out, and machine gun fire was also heard in the area,  as firemen rushed to the scene to douse the flames.

There was no immediate claim of responsibility for the attack, which left a large crater in a major road, according to pictures released by the SANA state news agency. "It is terrorism... Is that what you call IslamIJ" one of the wounded told Syrian television.

"Is that the freedom you wantIJ Is that the (rebel) Free Syrian ArmyIJ" said another man, speaking at the site of the attack.

The windows of the Russian embassy were blown out by the blast, but none of its staff were hurt, Russian news agencies reported.