The Islamic State group is being blamed for a suicide attack which killed 10 tourists, eight of them Germans, in the ancient centre of Istanbul.

Key points: A 27yo suicide bomber believed to be responsible for Istanbul blast

A 27yo suicide bomber believed to be responsible for Istanbul blast Historic Sultanahmet tourist district targeted; mostly Germans killed

Historic Sultanahmet tourist district targeted; mostly Germans killed Turkish President Erodogan calls bombing "a terror attack"

Turkish President Erodogan calls bombing "a terror attack" Turkey imposes media ban on the reporting of the blast

City authorities said 10 people were killed and 15 wounded in the blast on Tuesday morning (local time).

Turkish President Recep Tayyip Erdogan said the attack was carried out "by a suicide bomber of Syrian origin", while Prime Minister Ahmet Davutoglu said the man belonged to the Islamic State extremist group.

Officials said he was a Syrian born in 1988.

All of those killed in Sultanahmet square were foreigners, Mr Davutoglu said.

At least eight were German citizens, and Peru's foreign ministry said a Peruvian man also died.

Norway's foreign ministry said one Norwegian man was injured and was being treated in hospital.

"This incident showed again we have to stand together in the face of terror," Mr Erdogan said in a speech in Ankara in his first reaction to the blast.

"Turkey's determined position will not change. We don't make any difference between the names or abbreviations [of terror groups].

"The first target of all the terror groups active in this region is Turkey. Because Turkey fights them all with the same determination."

Latest attack deepens resolve to combat terrorism: Merkel

There was no immediate claim of responsibility but Islamist, leftist and Kurdish militants, who are battling Ankara in south-east Turkey, have all carried out attacks in the past.

Several bodies lay on the ground in the square, also known as the Hippodrome of Constantinople, in the immediate aftermath of the blast.

It was not densely packed at the time of the explosion, according to a police officer working there, but the suicide bomber is believed to have blown himself up next to a German tour group.

Mr Davutoglu had earlier told German Chancellor Angela Merkel that the details of an ongoing investigation regarding the suicide attack would be shared with German officials.

Sorry, this video has expired Foreigners a target in Istanbul attack ( Beverley O'Connor )

He said the bomber was believed to have recently entered Turkey from Syria but was not on Turkey's watch list of suspected militants.

Ms Merkel said the latest attack would deepen German resolve to combat international terrorism.

"Today it hit Istanbul, it has hit Paris, it hit Tunisia, it had already hit Ankara," she said at a press conference following talks with visiting Algerian Prime Minister Abdelmalek Sellal.

"International terrorism once again showed its cruel and inhuman face and along with the sorrow that we of course feel, it once again shows the necessity to act decisively against terrorism and ultimately overcome these atrocities."

A spokesperson for the Department of Foreign Affairs and Trade told the ABC it strongly condemned the attack in Istanbul.

The Australian Embassy in Turkey was making urgent enquiries with local authorities to find out whether any Australians had been affected.

Loading

"We heard a loud sound and I looked at the sky to see if it was raining because I thought it was thunder but the sky was clear," said Kuwaiti tourist Farah Zamani, 24, who was shopping at one of the covered bazaars with her father and sister at the time of the attack.

"The explosion was very loud. We shook a lot. We ran out and saw body parts," one woman who works at a nearby antiques store said, declining to give her name.

Kursat Yilmaz, who has operated tours for 25 years from an office by the square, said he believed Sultanahmet was attacked to "grab attention because this is what the world thinks of when it thinks of Turkey".

"We're not surprised this happened here, this has always been a possible target," he said.

The White House condemned the "heinous attack" and pledged solidarity with NATO ally Turkey against terrorism.

UN Secretary-General Ban Ki-moon called it a "despicable crime" and said the perpetrators must face justice.

Police forensic officers attend the scene after an explosion near the Ottoman-era Sultanahmet mosque. ( Reuters: Murad Sezer )

Reuters/AFP