It is understood the blast occurred near a base where Irish troops are stationed, and that Irish soldiers raised the alarm and attempted to administer first aid.
The UN Interim Force in Lebanon (Unifil) confirmed the explosion and said there were casualties but gave no details. A spokeswoman said: “It is suspected that the incident was caused by an explosive device.”
The Spanish Defense Ministry confirmed at least four Spanish peacekeepers were killed and three hurt.
The senior official in Beirut said a mine may have caused the explosion.
But a security official in southern Lebanon said the explosion was caused by a bomb on the side of a road between the towns of Marjayoun and Khiam, about six kilometres north of the Israeli border town of Metulla.
White smoke billowed from the armoured personnel carrier. Witnesses reported hearing another explosion shortly afterward but it was believed to be either ammunition or the vehicle’s fuel tank, which blew up.
There was no immediate claim for the attack.
Yesterday’s explosion was the first time Unifil has come under attack since it was reinforced last summer after the war between Hezbollah guerrillas and Israeli forces in Lebanon. The 13,000-member UN force along with 15,000 Lebanese troops patrols a zone along Lebanese-Israeli border.
Hezbollah denounced the attack, calling it a “suspicious act”. The militant group has had good relations with Unifil since the troops were first deployed in Lebanon in 1978.
There have been warnings that the peacekeepers could come under terror attacks, particularly from al-Qaida and its sympathisers.
Media reports earlier this month said interrogations by Lebanese authorities with captured militants revealed plots to attack the force.