The death toll is unclear. Local officials initially said nine people had been killed. A hospital spokesman later said three bodies had been found.
The blast follows a string of bombings in the eastern city in recent days.
Security remains precarious in Libya since the uprising against long-time leader Muammar Gaddafi, with protests by militias and attacks by Islamists.
A sombre-looking prime minister addressed the nation with several members of congress standing around him.
Ali Zidan offered his condolences and spoke of the authorities’ inability to take the strict measures needed to prevent this kind of attack. But he acknowledged it was their duty to do so.
The bombings raise many questions, but one thing is clear – the nature of these attacks has changed. According to observers in Benghazi, the initial attacks on government institutions were part of a power struggle with local extremist groups.
People are increasingly asking who backs these groups. Accusations in recent days have focused on the Muslim Brotherhood and the state of Qatar – denied by both.
Monday’s attack has left a bitter sentiment among the people of Benghazi. They are angry and on the streets. The transitional authorities cannot dampen their fury by promising protection that they cannot provide in the birthplace of the Libyan uprising.
The head of Jalaa hospital told AFP news agency that his facilities had received three bodies, as well as bodyparts that could belong to other viticms.
He also said another nine people had been wounded, three of them critically.
The explosives were placed in a grey Toyota near the hospital, officials and eyewitnesses say.
Libyan Deputy Interior Minister Abdullah Massoud as saying that the bomb had “totally destroyed a restaurant and seriously damaged nearby buildings”.
So far no group has said it carried out Monday’s attack in Benghazi, which is regarded as the cradle of the revolution that ousted Gaddafi in 2011.
Angry crowds later gathered at the scene, blaming militants for the bombing and urging the authorities to drive them out of the city.
Many demonstrators chanted “Rise, Benghazi!”
“This is the flesh of our sons, this is what the militias have given us,” one of the protesters was quoted as saying by Reuters news agency. “All we need here are the police and the army.”
This is the latest in a string of attacks across the country in recent months:
- At least three police stations were bombed in Benghazi last week – causing damage but not casualties
- In April, a car bomb exploded outside the French embassy in the capital, Tripoli, wounding two French guards and several residents
- In September 2012, the US consulate in Benghazi was attacked by armed men, leading to the killing of ambassador Christopher Stevens and three other American officials
Earlier this month, the UK said it had withdrawn some of its embassy staff in Libya in response to what London described as “ongoing political uncertainty”.
Source: bbc.com/Jeffrey Nyabor