A car bomb has exploded in a neighbourhood stronghold of Shiite militant group Hezbollah in Beirut.

The powerful blast came as many among Lebanon Shiites began observing the holy month of Ramadan and was the deadliest explosion to hit the area in years. It was seen as a direct result of the civil war raging in neighbouring Syria.

Hezbollah militants have been fighting alongside troops loyal to Bashar al-Assad in Syria and their intervention has prompted vows of retaliation from predominantly Sunni rebel groups.

"This is a message, but we will not bow down," Ziad Waked, a municipal official, told Hezbollah's Al-Manar television.

Video footage showed black smoke billowing into the sky from the suburb of Beir el-Abed in south Beirut while casualties were rushed to hospital.

At least 18 people were wounded in the blast, local media reported. The Red Cross Red Cross put the number at 37, saying they were all light injuries, many of them from breaking glass.

Al-Manar TV said the blast came from a car bomb parked near an Islamic centre.

The blast zone has been cordoned off by Hezbollah fighters, some armed with Kalashnikov rifles. Many Hezbollah officials live and work in the area.

Hezbollah fighters were instrumental in the Syrian regime's victory in the strategic town of Qusair near the Lebanese border.

With skirmishes between Shiites and Sunnis on the rise around Syria, highly fragile Lebanon is increasingly buffeted by the powerful forces that are dividing the Arab world along sectarian lines.

Two rockets wounded four people in a Hezbollah stronghold in Beirut in May.