Security forces in Kandahar had already cleared the area around a bus  station where the van was found, provincial governor spokesman Daud Ahmadi  said.

"As the security forces were trying to defuse the van, it detonated," said  police spokesman Mohammad Qasim Azad.

"The latest figures show 16 dead and 38 wounded people brought to the  hospital. We still have two ambulances at the site because there might be more  people under the rubble," Dr Nehmat Barak, chief of the Mirwais Hospital in  Kandahar, said.

Ahmadi confirmed the toll, adding that the dead included four security  forces personnel. At least five children and 10 members of the security forces  were among the wounded.

The blast was so powerful that the majority of the casualties were  passers-by outside the cleared area.

Ahmadi said security forces also found a large container of explosives,  rocket-propelled grenades, suicide vests, and ammunition near the site.

"The terrorists planned to conduct a big attack at end of Ramadan in the  city among crowds of people as they went out shopping for Eid... security  forces prevented a disaster from happening," one security official told AFP.

No group immediately claimed responsibility.

The blast comes as the Taliban step up their spring offensive across the  war-torn country.

Last week the insurgent group attacked western Farah city, but were  repelled by commandos backed by the Afghan and US Air Force.

On Monday, the Taliban warned Kabul residents to avoid "military centres"  in the heavily fortified city, saying they are planning more attacks in the  Afghan capital.

A US government watchdog also warned Monday that upbeat assessments of  improving security in the country did not match facts on the ground.

The Pentagon's Office of the Inspector General said there were "few signs  of progress" in the fight against the Taliban.

Top US officials and military commanders insist the Afghan security forces  -- which have suffered thousands of casualties and are beset with low morale  and corruption -- are now doing a better job of maintaining order.

But the Taliban still control swathes of the country and are staging  repeated attacks, while the Islamic State group has conducted a series of  high-profile suicide blasts in Kabul and elsewhere. (Yonhap)