The blast at the Alghadir missile base at Bid Ganeh was so powerful it rattled windows 30 miles away in Tehran. Witnesses said it sounded like a huge bomb had been dropped. Seventeen of Iran's elite Revolutionary Guards were killed, among them a man described his peers as the "architect" of the country's missile programme, Major General Hassan Moghaddam.

The dead were buried with full state honours yesterday, and in a reflection of the extent of Iran's loss, the funeral was attended by the Supreme Leader, Ayatollah Ali Khamenei. The official account insisted the blast was an accident, but a source with close links to Iran's clerical regime blamed it on an operation by the Mossad, bolstering other reports of involvement by Israel's intelligence and special operations organisation that were attributed to western intelligence services.

If true, the blast would mark a dramatic escalation in a shadow war over the Iranian nuclear programme.

Moghaddam was an engineer by profession, reported to have been trained in ballistic science by China and North Korea. Mostafa Izadi, an Iranian Revolutionary Guards Corps commander, and a close friend, said in his obituary: "Since 1984 he pioneered the IRGC's ground to ground missile system ... the work which has so frightened the world's imperialist powers and the Zionist regime today."

At yesterday's funeral, Hossein Salami, the deputy head of the IRGC, echoed those sentiments in his eulogy. He declared: "Martyr Moghaddam was the main architect of the Revolutionary Guards' cannon and missile power and the founder of the deterrent power of our country."

Moghaddam's violent death, coming in the wake of a series of assassinations of Iranian nuclear scientists on the streets of Tehran and rising tensions over Iran's nuclear and missile programmes, raised questions about whether the explosion was deliberate sabotage and the latest, bloodiest blow in a covert war.

Iran had blamed the killings of three scientists in the past two years on Israel, but on this occasion, the IRGC public relations department was quick to rule out sabotage while at the same time saying that the investigation into the incident had not been completed.

Speaking to the Guardian on condition of anonymity, however, a former director of an Iranian state-run organisation with close links to the regime, said: "I believe that Saturday's explosion was part of the covert war against Iran, led by Israel."

The former official compared Saturday's incident to a similar blast in October 2010 at an IRGC missile base near the city of Khorramabad. "I have information that both these incidents were the work of sabotage by agents of Israel, aimed at halting Iran's missile programme," he said.

The bases in both cases housed Iran's Shahab-3 missiles, based on a North Korean design. An upgraded variant was said to have a range of 1,200 miles, which would allow it to reach Israel. A report last week by the International Atomic Energy Agency (IAEA) said its inspectors had found evidence that Iran had carried out research and tests on making a nuclear warhead small enough to put on the top of a Shahab-3. The report found there was more solid evidence for such research up to 2003 than in later years, but said there were signs that research, including computer modelling, was continuing.

The official account of Saturday's blast said it had taken place in an arms depot when munitions were being moved. Other reports said a Shahab-3 detonated while Moghaddam was overseeing its redeployment. Witnesses spoke of hearing one giant blast rather than a series of detonations which might be expected from a blaze in a munitions store.

Time magazine also cited a "western intelligence source" as saying the Mossad was behind the blast and that many more would follow. "There are more bullets in the magazine," the source said.

Western officials would not comment on the claims, but would not rule out Israeli involvement.

If it was an act of sabotage, blowing up one of Iran's most prized weapons as the godfather of the missile programme was within range was a remarkable coup. It would also mark a serious escalation in a covert war being fought by both sides.

In addition to the killings of three Iranian scientists, a team on motorcycles tried in November 2010 to assassinate a senior official in the nuclear programme, Fereydoun Abbasi-Davani, the target of UN sanctions for his suspected role in a nuclear weapons programme. He survived when a bomb was stuck to the side of his car in Tehran traffic. Three months later he was promoted to overall control of the nuclear programme.

Western intelligence agencies are believed to have tried to slow down Iran's nuclear programme by supplying defective parts for centrifuges used for enriching uranium, while Israel and the US were reported to have been behind a computer worm called Stuxnet, which infected the operating systems at Iran's uranium enrichment plant in Natanz last year and contributed to its temporary shutdown in November 2010.

Such efforts may have slowed down Iran's progress but this month's IAEA report showed they have failed to stop it, as Iran has steadily built up its stockpile of low enriched uranium. That can be used for reactor fuel, or – if further enriched – the fissile core of a weapon.

Michael Elleman, an expert on Iran's ballistic missile programme at the International Institute for Strategic Studies said he doubted that Moghaddam's death, accidental or otherwise, would have a decisive impact. "Given the sophisticated and disciplined engineering management structure applied to Iran's missile efforts, the loss of any one person should result in minimal damage to the overall programme," he said.

Elleman thought that sanctions had probably been more effective in slowing the Iranian down. If so, and if Saturday's blast does indeed prove to have been deliberately engineered, it could prove a costly miscalculation. US officials believe a plot uncovered in October to kill the Saudi ambassador to Washington by blowing up a popular restaurant in Washington was the work of the IGRC, possibly in retaliation for the assassinations of the Iranian scientists. If so, more reprisals could be in the pipeline.

• This article was amended on 15 November 2011 to clarify that the killings of three Iranian scientists did not all take place in November 2010.