"So far two people are dead. Twelve houses are damaged, including three badly destroyed, so we can say it was a big explosion, but we will confirm after more extensive investigation," national police spokesman Sisno Adiwinoto said.

"We found aluminum foil around the blast scene, so it's possible that this came from a bomb, but we cannot confirm yet what type," he told ElShinta radio.

The blast occurred in Pasuruan, a town about 50 kilometres (30 miles) southeast of Surabaya, Indonesia's second largest city.

Asked about whether the blast may have been related to Islamic militant activity, he said Indonesia's anti-terror unit, Detachment 88, had "been monitoring activities in the area, but I cannot confirm specifically the whereabouts, so let's just wait."

The owner of the house where the blast originated was being held for questioning, he added.

A doctor told the radio station that four people had also been hurt.

"Four people were rushed here. One of them is in a critical condition with head injuries," said Fitri, speaking from a local hospital.