A Yemeni soldier packing powerful explosives under his uniform blew himself up in the middle of an army battalion in Sanaa on Monday, killing 96 troops and wounding around 300, a military official and medics said.

The suicide attack was the deadliest in the country's capital since newly-elected President Abdrabuh Mansur Hadi pledged to oust Al-Qaeda militants from Yemen's mostly lawless and restive southern and eastern provinces.

Medics, speaking on condition of anonymity, said the casualties were being treated in seven hospitals across Sanaa. All the dead and injured were soldiers, they added.

There was no immediate claim of responsibility for the massive blast which according to witnesses echoed loudly across the city, causing panic among residents.

The unidentified bomber detonated his explosives as soldiers from the government's central security forces, commanded by a nephew of former president Ali Abdullah Saleh, rehearsed for an army parade to mark the 22nd anniversary of the unification of north and south Yemen, according to the military official.

Yemen's defence minister, Mohammed Nasser Ahmed, was present at the time of the explosion but escaped unharmed, the official added.

Witnesses said human remains were scattered across the site of the blast at Sanaa's Sabeen Square, where the Yemeni government often holds large military parades.

An AFP correspondent said dozens of ambulances rushed to evacuate the dead and wounded, as security forces cordoned off the area.

Monday's attack is Sanaa's most deadly since Hadi took power in February with a pledge to fight Al-Qaeda's growing presence in the county.

Hadi, who was elected in a single-candidate vote as stipulated by the Gulf-sponsored transition deal that forced Saleh's ouster, was expected to give a speech at the military ceremony scheduled for Tuesday.

It remains unclear if the parade will take place as planned.

The suicide bombing comes 10 days into a massive army offensive against Al-Qaeda in Yemen's restive southern Abyan province, where the jihadists have seized control of a string of towns and cities in attacks launched since May last year.

Since the offensive began, 213 people have been killed, according to a tally compiled by AFP, including 147 Al-Qaeda fighters, 31 military personnel, 18 local militiamen and 17 civilians.

The offensive followed days after the White House announced that a plot by Al-Qaeda in the Arabian Peninsula (AQAP) to blow up a US airliner had been foiled.

According to Western diplomats in Sanaa, US experts have been advising the Yemeni army in combat.

John Brennan, US President Barack Obama's top counter-terrorism aide held talks in Sanaa last week with President Abdrabuh Mansur Hadi on 'combatting terrorism' and attempts by Yemen's army to crush the local branch of Al-Qaeda.

Yemen military and tribal sources said on Monday that 11 Al-Qaeda fighters and three Yemeni soldiers were killed in latest fighting around the southern city of Jaar.

The fighting during the night took place mainly at the western entrance of Jaar, a military source said, adding that 17 soldiers were wounded in the clashes.

On Sunday, residents said the Yemeni air force had launched four strikes on Al-Rabwa, at Jaar's western entrance, and that they saw militants using vehicles to take away the bodies of several militants killed.

Residents and tribes in the area surrounding Jaar have formed armed militias, Popular Resistance Committees, to back the army, similar to those formed in other Abyan towns -- Loder and Mudia.

Troops on Thursday took full control of Loder, which militants have been trying to seize for several months.