PESHAWAR, Pakistan (REUTERS) - At least twelve people were killed on Thursday by a car bomb at a camp in north-west Pakistan for people displaced by fighting between government forces and Islamist militants, police said.

The bomb exploded in the Jalozai camp in Nowshera in Khyber Pakhtunkhwa province, an area bordering Afghanistan and a stronghold for insurgents bent on toppling Pakistan's US-backed government.

"Food was being distributed among the internally displaced persons when the blast took place," Nowshera police chief Mohammad Hussain said, adding that 35 people were wounded.

The camp is home to people who have fled violence in ethnic Pashtun areas along the border with Afghanistan where Al-Qaeda and Taliban militants operate.

Hundreds of thousands of people have fled from conflict over the past five years or so, from the tribal areas along the border and from elsewhere, such as the Swat valley, northwest of Islamabad.

Many people have been able to go home, especially those from Swat, but thousands remain in camps.

The Pakistani Taliban denied responsibility for the blast.

Spokesman Ihsanullah Ihsan said it was "inhuman and un-Islamic to target innocents".

The blast comes days after the elected government completed its full five-year term, the first in the country's volatile history to do so.

The government has struggled with Taliban violence, sectarian unrest, chronic power cuts and a fragile economy.

General elections will be held on May 11.