NEW DELHI - A BOMB ripped through a crowded market in India's capital New Delhi on Saturday, killing two people and wounding 18 others, three of whom are in critical condition, police said.

Joint police commissioner Ajay Kashyap said the victims were a small girl and a boy.

'We are examining witnesses who saw two men throw a piece of plastic bag from a motorcycle. That caused the blast,' he said.

Mr Raj Singh Daswal told Reuters he saw two men on a motorcycle drop a black plastic bag which was picked up by a boy.

'He ran after the men telling them 'uncle, uncle you dropped something',' Mr Daswal said. 'Immediately after, there was a huge explosion. The boy's head was blown off.'

Deputy police commissioner H.S. Dhaliwal confirmed the account. He said, 'Two young men in black denims, black T-shirts and wearing helmets drove a motorcycle to the market and the pillion rider dropped a polythene bag containing the bomb.'

'A 10-year-old boy tried to help and return the bag to the riders but they sped away at high speed and the bag exploded, killing the child instantly.'

City police chief Y.S. Dadwal told Reuters: 'We are looking for clues and trying to find out how the blast happened'.

Checkposts been thrown up across the city to hunt for the attackers.

The bomb left a crater on the road. Police cordoned off the blast site to keep away a crowd of hundreds of people. Many, including wailing women, tried to break through the cordon.

The bomb went off outside an electronics shop in the congested Mehrauli market in leafy south Delhi, when afternoon shoppers were out in full force buying for the upcoming Hindu festival season, and sent passers-by fleeing.

The area was quickly sealed off by police.

'It was lunchtime, and we heard a loud bang. There was smoke everywhere. People were on the ground,' a local shopkeeper told AFP.

'I picked up three people, and there were ten other people with injuries on the ground,' added Mr Basant Kumar, another witness. 'My brother was hit in the ear.'

People were seen walking in blood-stained shirts. Locals carried the injured to hospital. Bomb experts picked through debris for clues and sniffer dogs were brought in.

Police said they were evacuating people from all major markets in the city.

'I strongly condemn in strongest terms these barbaric acts of violence leading to loss of innocent lives, including children,' India's Foreign Minister Pranab Mukherjee said.

'The government is determined to end this menace and to take appropriate steps. The culprits will be brought to book.'

The explosion comes days after a series of bombs in the capital that killed 23 people and wounded more than 100 others.

Those attacks had put New Delhi on alert and police were raiding Muslims quarters and criminal hideouts.

They shot dead two Muslims in a raid last week, claiming one of them was the mastermind of the New Delhi bombings.

Hundreds of people have been killed in a wave of bombings in India in recent years, mostly blamed on Muslim militants, with targets ranging from mosques and Hindu temples to trains.

In July, at least 45 people were killed when a series of bombs ripped through Ahmedabad, the main city of the western state of Gujarat. A day earlier, one woman died when eight bombs went off in the IT hub of Bangalore.

In May, more than 50 people were killed in coordinated bomb attacks in the western tourist city of Jaipur.

The failure to prevent such attacks has become an embarrassment for the Congress party-led coalition government, with elections less than a year away.

Police have blamed the banned Students' Islamic Movement of India for most attacks in recent years, but say that local Muslims appear to have been given training and backing by militant groups in neighbouring Pakistan and Bangladesh. -- REUTERS, AFP