A Pakistani politician who stood up against the country's tough anti-blasphemy laws has been gunned down by one of his own bodyguards in a brazen daylight attack in the capital Islamabad.

The governor of Punjab province, Salman Taseer, was shot dead as he got into his car at an upmarket shopping centre.

The Punjab governor was an outspoken critic of religious extremists and had called for the scrapping of the death penalty for the crime of blasphemy.

Mr Taseer was a member of the ruling Pakistan People's Party (PPP) and was a close ally of president Asif Ali Zardari.

Prime minister Yousuf Raza Gilani has condemned the assassination and declared three days of national mourning.

Hundreds of people gathered outside Mr Taseer's home last night to express their shock at what had happened.

Mr Taseer was one of the most moderate political voices in the PPP, which this week slumped into a major political crisis when its junior coalition partner walked out of the federal government.

He was outspoken against the Taliban and other Islamist militants hunkered down in the country's north-west, and who have made increasing inroads into Punjab in recent years.

Most recently he had spoken out against controversial blasphemy laws.

Blasphemy, which carries the death penalty in Pakistan, has been a very volatile issue, with particular focus on the case of a young Christian woman accused of blasphemy.

Mr Taseer had said the death penalty was too severe as a punishment, coming out publicly in support for the young woman and calling for a change in the law.

His stance drew strong criticism from some Muslim clerics in Pakistan and Mr Taseer had said he believed he was a target because of it.

Interior minister Rehman Malik says the killer was a member of Mr Taseer's own security team.

He said the killer quickly confessed to the crime and had apparently worked for the governor on five or six previous occasions.

"He confessed that he killed the governor himself because he had called the blasphemy law a black law," Mr Malik said.

"He has confessed his crime and surrendered his gun to police after the attack," he told reporters.

The brazen daylight shooting came as wealthy Pakistanis and expatriates were enjoying a late lunch or afternoon coffee in nearby cafes.

Spent cartridges littered the road outside Kohsar market in Islamabad's F6 sector, just a short distance from where Mr Taseer kept a home, witnesses said.

Local administration chief Amir Ahmad Ali said Mr Taseer died in hospital after being wounded in the shooting in F6.

"I was in the market. I heard the gunfire and hit the ground," said Shaukat, 28, a labourer.

"Later on, while running for shelter, I saw a man in uniform being grabbed by police. Later on, police officials said he was the attacker."

Police and anti-terrorism forces surround the area and the market closed after the attack.

US State Department spokesman PJ Crowley has expressed his condolences over the governor's assassination.

"From our standpoint his death is a great loss," he said.

"He was committed to helping the government and people of Pakistan persevere in their campaign to bring peace and stability to their country."

Mr Taseer made his money as a chartered accountant, setting up consultancy firms and a brokerage house, and with investments in telecommunications, the media, insurance and real estate before going into politics.

He served as minister for industry and production under former military ruler Pervez Musharraf from 2007 to 2008.

- ABC/AFP