At least one person was wounded when a blast hit a hotel used by rebels and foreigners in Libya's rebel-controlled eastern city of Benghazi on Wednesday, a Reuters report said.

The explosion took place in the hotel that has been used for rebel news conferences, and the National Transitional Council, which is fighting to topple Libyan leader Muammar Gaddafi.

Many journalists too are staying at the hotel which overlooks the sea in central Benghazi.

A witness at the scene saw two fire brigade vehicles, an ambulance and a tow truck dragging away a burnt vehicle. Security has also been tightened around the hotel.

A police officer ,Nasser El Haram, told Reuters that the rebel authorities believed the explosion might be linked to Gaddafi agents still operating in rebel-controlled eastern areas.

It could be the remnants of Gaddafi's regime because the Tibesti hotel is the symbol of the revolution, he said.

Abdel Hafiz Ghoga, vice chairman of the National Transitional Council, said that the explosion was believed to have been caused by a hand grenade thrown from a distance.

Four cars exploded as a result of the hand grenade. The investigation is under way until we find out the type of bomb, he said. People know that these attempts are targeted against their freedom but on the contrary, these attempts speed up the revolution and its success, he added.

Describing the incidence as a desperate attempt by Gaddafi's supporters to terrorize people, he further said This is evidence that Gaddafi's regime is running out of options. The chains are tightening around him, the report stated.