The attack occurred in the town of Mardan, 37 miles north of Peshewar, the capital of the North West Frontier Province (NWFP), which is considered a haven for militants with links to the Taliban and Al Qaeda.
A Taliban spokesman said that Tehrik-e-Taliban (Pakistan Taliban Movement) carried out the bombing in revenge for a suspected United States missile strike on a rebel camp in Pakistan's tribal belt last week, reports Agence France-Presse.
Sunday's attack was the deadliest since a new Pakistani government came to power in March and launched a peace initiative with Taliban militants in an attempt to root out Al Qaeda operatives from the tribal belt that borders Afghanistan. Pakistan has begun decreasing its troop numbers in parts of its border region and freeing Taliban prisoners.
On Friday, the militants freed the Pakistani ambassador to Afghanistan, Tariq Azizuddin, who had been held by the Pakistani Taliban for more than three months.
US officials have questioned making such deals with the Pakistan Taliban, pointing out that previous talks gave militants time to regroup, resulting in a rise in Taliban attacks on US and NATO troops in Afghanistan.
The Christian Science Monitor pointed out that according to the State Department's recently published annual terrorism report, suicide attacks in Pakistan had more than doubled to 887 last year because of terrorist regrouping during a 2006 cease-fire.
Sunday's attack came as Pakistani Prime Minister Yousuf Raza Gilani met President Bush at a World Economic Forum conference in Egypt, where Mr. Gilani said his government was committed to fighting terrorism.
A report in Pakistan's Daily Times newspaper quoted a senior Army officer rebutting the US view of the situation in Pakistan.
"No Pashtun is a terrorist," 14 Division GOC Maj-Gen Tariq Khan told journalists while showing them the forward positions of the army in a former stronghold of Baitullah Mehsud [the head of a leading umbrella group of militants known as Tehrik-e-Taliban]. He also disagreed with the US allegation that the Pakistan Army was being lenient with Al Qaeda and the Taliban. "I would disagree with the US claims of [us] being soft on militants."
India's position emanates from a number of factors. There is little hope that the new civilian government in Pakistan will take any strong measures to stanch the growth of the terror machine. India is very uncomfortable with Pakistan's new efforts to reach a peace deal with Taliban and other militants in [Federally Administered Tribal Areas] and believes it is headed down the same slippery slope as the peace deals Pervez Musharraf struck with the Taliban in 2005 and 2006.
"We don't think this is a good deal, because there are no good terrorists or bad terrorists, and you cannot really treat them as an organized force, particularly when they haven't renounced violence, ideals or goals," a source said.
The New York Times reported the view that Sunday's suicide bomb attack may have been carried out without Mr. Mehsud's direction. In the first 10 weeks of 2008, before Pakistan's new government assumed power, there were 17 suicide bombings in Pakistan. Since then, the region had been more peaceful.
But on Monday, Reuters reported that NATO had beefed up its military presence on the Afghan border, suspecting that the peace deals would result in attacks into Afghanistan. NATO said militant attacks had already increased in the areas near to where peace talks were underway.
"Our analysis of the previous peace deals ... is that when that dialogue is ongoing or when talks have been consummated in peace deals we see a spike in the untoward events that we experience on our side of the border," said General Dan McNeill, commander of NATO's 47,000-strong International Security Assistance Force (ISAF) in Afghanistan.
General MacNeill was also quoted as saying that insurgency was not the biggest security threat in the region. The "scourge of illegal narcotics" – Afghanistan produces 93 percent of the world's opium – and corruption were bigger problems, he said.