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That attack was followed weeks later by the arrest in Denmark of five men for allegedly planning to attack the newspaper which first ran the Mohammad cartoons.
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A Reuters witness said he had seen soldiers taking up positions around the centre of the capital, while police said they feared there might be explosives at the youth camp.
"I've seen it with my own eyes, at least 20 dead people lying in the water," Andre Skeie, 26, told Reuters by telephone. He said he had gone to Utoeya island with his boat to help people evacuate the island after the shooting.
"It exploded it must have been a bomb.
claim of responsibility and while the attacks appeared to bear the hallmarks of an Islamist militant assault, analysts said it was too early to draw any conclusions.
Police declined to comment on casualties at the youth camp at Utoeya, north west of Oslo. State television said a man was arrested.
Nearby ministries were also hit by the blast, including the oil ministry, which was on fire. Nevertheless, security is not tight given the lack of violence in the past.
The failed December attack in Stockholm was by a Muslim man who grew up in Sweden but said he had been angered by Sweden's involvement in the NATO led force in Afghanistan and the Prophet Mohammad cartoons.
The attack came just over a year after three men were arrested on suspicion of having links to al Qaeda and planning to attack targets in Norway. forces killed Osama bin Laden in a raid on his hideout in Pakistan.
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One witness said he saw 20 dead at the youth camp, but police said they had no confirmation of deaths on the island.
which recently put out a translation of a Danish book on the Mohammad cartoon controversy was also affected, but was apparently not the target. (1330 GMT). A Reuters witness saw eight people injured, one covered in a sheet and apparently dead.
The Oslo blast tore at the facade of the 17 storey central government building, blowing out most of the windows and scattering shards of metal and other debris for hundreds of metres (yards).
Violence or the threat of it has already come to the other Nordic states: a botched bomb attack took place in the Swedish capital Stockholm last December and the Converse White Shoes For Girls
Shortly after the bomb, a gunman described by a police official as tall and blond opened fire at the island of Utoeya north west of Oslo, sending people scattering in terror. The target was a youth camp of Stoltenberg's Labour party youth section. It was very terrifying," a young woman present at the island youth camp told British Sky television. She said police helicopters were flying overhead.
Denmark has received repeated threats after a newspaper published cartoons of the Prophet Mohammad in late 2005, angering Muslims worldwide.
bomber was killed.
NATO member Norway has been the target of threats before over its involvement in conflicts in Afghanistan and Libya.
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A bomb ripped through Oslo's central government Womens Converse High Tops Cheap district on Friday killing seven people, police said, and hours later a gunman opened fire at a youth camp on a nearby island.
Madrid suffered an Islamist militant bomb attack on commuter trains in 2004 that killed 191 people. Four suicide bombers killed 52 people in an attack on London's transport system in 2005.
With police advising people to evacuate central Oslo, apparently in fear of more attacks, Prime Minister Jens Stoltenberg told Norwegian TV2 television in a phone call that the situation was "very serious". He said that police had told him not to say where he was speaking from.
The Oslo bomb blew out the windows of the Prime Minister's building, damaged the finance and oil ministries and scattered glass and masonry across the streets.
In July 2010, Norwegian police arrested three men for an alleged plot to organise at least one attack on Norwegian targets and said they were linked to individuals investigated in the United States and Britain.
Norwegian commercial broadcaster TV2 said several people had been killed in the shooting spree.
Daily newspaper VG said on its website the gunman had been dressed as a policeman.
"This is a terror attack. It is the most violent event to strike Norway since World War Two," said Geir Bekkevold, an opposition parliamentarian for the Christian Peoples Party.
The Reuters correspondent said the streets had been fairly quiet in mid afternoon on a Friday in high summer, when many Oslo residents take vacation or leave for weekend breaks.
The district attacked is the very heart of power in Norway, with several other key administration buildings nearby.
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