A bomb outside the Indian High Court in the capital Delhi has killed 10 people and injured at least 61.
Prime Minister Manmohan Singh called it a "cowardly act of a terrorist nature".
The bomb was apparently placed in a case near the first security checkpoint at the court, where people were queuing for passes, officials said.
Investigators said they were taking seriously an email claim by the extremist group Harkat-ul Jihad al-Islami (Huji) that it planted the bomb.
"It would be very premature to make any comment on the mail at this stage, but yes, that mail has to be looked at seriously, because Huji is a very prominent terrorist group," SC Sinha, Director General of India's National Investigation Agency, told reporters.
The email reportedly demands that a man sentenced to death for involvement in an attack on Delhi's parliament ten years ago should not be hanged.
The US state department says Huji is a terrorist organisation with links to al-Qaeda. The group has been accused of carrying out attacks in India, Pakistan and Bangladesh.
The leader of Huji, Ilyas Kashmiri, was reportedly killed in a US drone strike in north-western Pakistan in June.
Crowded area
Wednesday's explosion occurred around 10:17 local time (04:47 GMT).
"It appears that the bomb was in a suitcase because we have the remains of that suitcase," the senior civil servant in the home ministry, RK Singh, told the CNN-IBN news channel.
Prime Minister Singh, who is on a visit to the Bangladeshi capital Dhaka, condemned the attack.
"This is a long war in which all political parties, all the the people of India, have to stand united so that this scourge of terrorism is crushed," he told reporters.
Intelligence agencies shared information with Delhi police in July about the latest threats, Home Minister P Chidambaram told parliament.
"At this stage it is not possible to identify the group that caused the bomb blast today," he said.
News channels showed ambulances taking away a number of people who appeared to be severely injured.
The bomb left a deep crater on the road and shook the courthouse, prompting lawyers and judges to flee outside.
Eyewitness Chanakya Dwivedi told the BBC the blast took place just before the first security checkpoint.
Delhi police have released a photofit of two suspects linked to the blast
"As I was just about to enter the Chief Justice's court, I heard a huge bang that shook the building and gave the effect of an earthquake," he said.
"After 20 seconds' commotion, I saw huge smoke on the front gate... It was a bomb blast with blood all around and lot of people crying."
He went on: "About 15 to 20 minutes later, all the lawyers were asked to stay in the complex, and after that, the lawyers were asked to evacuate the building.
"The emergency services reacted in quick time, but still I guess the damage was already done till then."
The blast at the High Court was the second to target the building in five months and came despite a high alert across the city.
Correspondents say it has renewed doubts about India's ability to protect even its most important institutions, despite a security overhaul that followed the 2008 Mumbai siege.
Speaking in parliament, opposition lawmaker Arun Jaitley asked: "Have we become so vulnerable that terrorist groups can almost strike at will?"
In July, 26 people died in three explosions in the country's financial capital, Mumbai (Bombay).
Both Delhi and Mumbai are now on high alert.
The BBC's Sanjoy Majumder in Delhi says the area was crowded with lawyers and witnesses because Wednesday is the day when most public-interest litigation is heard at the high court.
Forensic experts are now collecting debris for analysis.
"As I was just about to enter the Chief Justice's court, I heard a huge bang that shook the building and gave the effect of an earthquake," he said.
"After 20 seconds' commotion, I saw huge smoke on the front gate... It was a bomb blast with blood all around and lot of people crying."
He went on: "About 15 to 20 minutes later, all the lawyers were asked to stay in the complex, and after that, the lawyers were asked to evacuate the building.
"The emergency services reacted in quick time, but still I guess the damage was already done till then."
The blast at the High Court was the second to target the building in five months and came despite a high alert across the city.
Correspondents say it has renewed doubts about India's ability to protect even its most important institutions, despite a security overhaul that followed the 2008 Mumbai siege.
Speaking in parliament, opposition lawmaker Arun Jaitley asked: "Have we become so vulnerable that terrorist groups can almost strike at will?"
In July, 26 people died in three explosions in the country's financial capital, Mumbai (Bombay).
Both Delhi and Mumbai are now on high alert.
The BBC's Sanjoy Majumder in Delhi says the area was crowded with lawyers and witnesses because Wednesday is the day when most public-interest litigation is heard at the high court.
Forensic experts are now collecting debris for analysis.
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