A series of coordinated terrorist explosions have rocked London's underground rail network and ripped one bus apart, according to reports.

The blasts hit three underground train stations and one bus in central London during morning rush hour shortly before 9am (5pm Malaysian time).

Police said at least 38 people have been killed.

Brian Paddick, deputy assistant commissioner of the Metropolitan Police, said seven people were killed on an underground train near Moorgate station, 21 confirmed dead near Liverpool Street subway station and five dead at Edgware Road.

In a press conference, ambulance staff said 45 people were in a serious or critical condition with burns, amputations, chest and blast injuries and broken limbs.

Another 300 had minor injuries with lacerations, smoke inhalation, shock and cuts and bruises.

People were also killed when a blast blew the roof off a double-decker bus near Russell Square but the number was not immediately clear

One caller to BBC Five said his friend had seen "the bus ripped open like a can of sardines and bodies everywhere."

The Guardian newspaper's online edition quoted eyewitnesses as saying that they saw 'bodies lying around without arms and legs'.

According to Sky news, reliable sources said at least 45 people had died and a thousand injured, with fatalities likely to rise.

A sombre British Prime Minister Tony Blair, who was attending the G-8 Summit in Scotland, confirmed that London had suffered a series of terrorist bombings.

"It is particularly barbaric that this has happened on a day when people are meeting to try to help the problems of poverty in Africa, the long-term problems of climate change and the environment," he said.

He added the attacks were "designed and aimed to coincide with the opening of the G8".

It is also unclear whether suicide bombers were involved.

Underground train network shut down

The Scotland Yard had earlier said it received reports of "multiple explosions" in Edgware Road, King's Cross, Liverpool Street, Russell Square, Aldgate East and Moorgate.

According to Reuters , people were seen streaming out of a London underground station covered with blood soon after the blasts.

It added that similar scenes were reported by witnesses outside other stations in the capital.

The whole of the system was shut down and major thoroughfares were also closed, paralysing the whole city.

The chaos came a day after the British capital was chosen to host the 2012 Olympics.

Meanwhile, the Times newspaper said the blasts appeared to be cordinated and bore the hallmarks of the al-Qaeda terror network.

It also drew a comparison between the incidents in London to the attack in Madrid in March 2003 carried out by the network helmed by Osama bin Laden.

In that attack, 191 people were killed and more than 1,500 wounded when 10 bombs exploded on four commuter trains.

The Madrid bombings were the first such major attack against a European public transportation system.

A letter posted on a website frequently used by al-Qaeda claims that the 'Secret Organisation of al-Qaida in Europe' is responsible for today's massive terrorist attack.

The group also issues warnings to Denmark and Italy.

Markets around Europe slumped on hearing news of the attacks.