An explosion hit a bus in the heart of Tel Aviv on Wednesday, wounding at least 10 people in what officials said was a terrorist attack.

The blast shattered windows on the bus, which was driving on a street that runs alongside Israel's defence headquarters. Israel's ambulance service said three of the wounded were in a moderate-to-serious condition.

"A bomb exploded on a bus in central Tel Aviv. This was a terrorist attack. Most of the injured suffered only mild injuries," said Ofir Gendelman, a spokesman for Prime Minister Benjamin Netanyahu.

In a message on Twitter, he said police were combing the area for the person who planted the device, apparently confirming reports that it was not a suicide attack. Israeli media said a man had been arrested.

The bombing happened on the eighth day of an Israeli offensive against the Hamas-ruled Gaza Strip and threatened to complicate Egyptian-led efforts to secure a ceasefire.

Celebratory gunfire rang out in Gaza City when local radio stations reported news of the Tel Aviv explosion.

Hamas spokesman Sami Abu Zuhri praised the bombing, but stopped short of claiming responsibility.

"Hamas blesses the attack in Tel Aviv and sees it as a natural response to the Israeli massacres...in Gaza," he told Reuters.

"Palestinian factions will resort to all means in order to protect our Palestinian civilians in the absence of a world effort to stop the Israeli aggression," Abu Zuhri said.

The last time Israel's commercial capital was hit by a serious bomb blast was in April 2006, when a Palestinian suicide bomber killed 11 people at a sandwich stand near the city's old central bus station. – Reuters