The bomb detonated in the volatile Panjwayi district of the insurgency-hit province, interior ministry spokesman Yousuf Stanizai told AFP.

"There was a suicide attack in Panjwayi bazaar. Twenty-one civilians, including children, were killed and 13 others were injured," he said.

A Canadian soldier was killed in southern Afghanistan yesterday, the fourth Nato fatality since the alliance took command of the area this week, while police said 10 Taliban died in a raid.

The soldier was killed before dawn when an improvised bomb of the sort often used by the fundamentalist Taliban struck his vehicle on a main highway in southern Kandahar province, a statement said.

Another Canadian soldier from the Nato-led International Security Assistance Force (Isaf) soldier was wounded in the blast. He was expected to return to duty shortly, spokesman Major Scott Lundy told AFP.

The nearly 8,000 troops in six southern provinces that Isaf took command of on Monday include British, Canadian, Dutch and US soldiers.

Nineteen Canadian soldiers deployed to Afghanistan have been killed since 2001 when US-led forces toppled the hardline Taliban regime.

Kandahar, the birthplace of the Taliban, sees regular suicide and roadside bombings against foreign troops, mainly the 2,300 Canadians based in the volatile province since the beginning of the year.

The day after Isaf took over from the US-led coalition that toppled the Taliban regime, three British soldiers were killed in the north of neighbouring Helmand province when rebels attacked their convoy.

On Wednesday Nato warplanes provided air support when security forces in southern Helmand raided Taliban hideouts in Garmser district, the main town of which was captured by the rebels for about 48 hours last month.

Ten rebels were killed in the raid and two policemen were wounded, local police chief Mohammad Rasoul Aka said. Provincial police chief Mohammad Nabi Mullahkhil said 22 Taliban were killed or wounded but had no breakdown.

Aka said the bodies from Wednesday's offensive were still on the ground and security forces were chasing the insurgents in nearby mountains.

The operation was the latest in a series of sweeps since rebels overran the district headquarters in July, burning the Afghan flag and hoisting the emblem of what Afghan officials said was a pro-Taliban Pakistan-based Islamic outfit.

About 18 Taliban fighters were killed in a similar offensive on Tuesday.

The Taliban, unseated by the US-led coalition and Afghan warlords nearly five years ago, have this year stepped up their insurgency mostly in southern and eastern Afghanistan.

Troops and police have killed around 1,000 rebels in a major operation in the south over the past few months. More than 60 foreign soldiers and scores of Afghan civilians and security forces have also been killed in combat.

Nato has said the move into the hostile south is the most challenging military mission in its history and its first outside of the Europe-Atlantic area.

Isaf was first deployed to the capital in the aftermath of the unseating of the Taliban, later moving into the north of the country and then the west -- areas which see less Taliban violence than the south.

The force, which overall numbers about 18,000 troops from around 36 countries, is due to move into eastern Afghanistan this year, putting renewed emphasis on reconstruction while the coalition maintains a counter-insurgency force.