No one has claimed responsibility for Thursday's attack, which killed five people and wounded 68, but senior officials put the blame on the the separatist Kurdistan Workers' Party (PKK).

Investigators believe the bomb was made of about 40 kilogrammes (88 pounds) of explosives of a type the PKK has frequently used, a police source said on condition of anonymity.

The bomb was set off by remote control in central Diyarbakir near a military facility as an army vehicle carrying some 50 soldiers was passing by.

Four of the dead were high school students attending classes at a nearby private school. The wounded included about 30 soldiers.

"Four people have been taken into custody as part of efforts to identify and catch the perpetrators. Several lines of investigation are being pursued," Diyarbakir's chief prosecutor Durdu Kavak said in a statement.

One suspect was a former owner of the car used in the blast and police were looking for the person who recently bought the vehicle, police sources said.

The PKK, which has waged a bloody 23-year campaign for Kurdish self-rule in southeast Turkey, had threatened to retaliate against Turkish air strikes on its bases in neighbouring northern Iraq last month.

Police in Van, to the northeast of Diyarbakir, seized 55 kilogrammes of explosives and hand grenades in a van they had chased and which was found abandoned outside the city early Friday, local officials said.

The pursuit was launched following a tip-off that bomb attacks similar to the one in Diyarbakir were plotted in Van.

Nine kilogrammes of explosives and remote-control detonators, believed to belong to the PKK, were seized in a car in the northwestern province of Bursa Thursday evening, local governor Sehabettin Harput said, adding that the driver was detained.

In Ankara, Prime Minister Recep Tayyip Erdogan said more suspects could be detained for the Diyarbakir blast and accused the PKK, which is listed as a terrorist group by Turkey and much of the international community.

"The terrorist organisation has and never will represent our Kurdish citizens.... We will continue to fight them with determination and without concessions," he said in televised remarks.

"This is an attack against our unity and solidarity," he added.

Army chief Yasar Buyukanit said the blast reflected "panic" in PKK ranks following Turkish air raids on the group's camps in the mountains of northern Iraq, which the rebels use as a springboard for cross-border attacks inside Turkey.

"They are in panic over the losses they suffered in northern Iraq. But this will not change the end they will face," the Anatolia news agency quoted Buyukanit as saying during a visit to Diyarbakir.

The Turkish military has confirmed three air strikes against PKK targets in northern Iraq since December 16, conducted with US intelligence assistance.

It has said at least 150 militants were killed and more than 200 PKK positions destroyed.

Agriculture Minister Mehdi Eker, himself a Kurd from Diyarbakir, said Thursday's blast would not weaken the government's determination to improve the rights of the country's Kurds.

"We will fight terrorism on one hand and carry out reforms on the other hand to make Turkey more democratic," he said in Diyarbakir.

PKK rebels have been blamed for several bomb attacks in Diyarbakir and other major cities, including one at a crowded city park here in 2006, which killed 10 people, including seven children.

More than 37,000 people have been killed since the PKK took up arms in 1984.