A senior Pakistani security official who spoke to CBS News on condition of anonymity said the attack was being treated by the security community "as the beginning of a campaign of suicide attacks unless proven otherwise."
Monday's bombing came days after the Pakistani military stepped up attacks targeting hardline Taliban militants in Swat, following the breakdown of a controversial peace agreement between the government and the militants.
On Friday, military troops stepped up their offensive in the area, pounding artillery shells backed by air force planes which bombed sites suspected to have been used by Taliban militants.
The military campaign has been promised by Pakistani leaders as a battle to regain territory lost to Taliban militants. On Saturday, Pakistan's Prime Minister Yusuf Raza Gilani described the conflict in Swat as a "war for the future of the nation" and promised to see the conflict finally forcing the militants out of Swat.
However, Gilani and other government leaders are now also faced with an emerging humanitarian crisis, caused by thousands of families fleeing Swat for the relative safety of other parts of the northwest frontier province (NWFP) where Swat is located, as well as parts of the populous Punjab province and Islamabad, the Pakistani capital.
Critics warn the Pakistani government failed to anticipate a large outflow of internal refugees who will inevitably leave Swat following a strong military push. Imran Khan, Pakistan's best known cricket star who became a politician on Monday criticized the military operation when he told reporters in the southern city of Karachi, "Using the army is not a solution to such a challenging situation. I am totally opposed to the military operation in Swat."
Lieutenant General (Ret.) Hamid Nawaz Khan, a former respected military commander called for a halt to the military operation for a few days if needed "to begin dealing with the humanitarian situation," on Pakistan's privately owned GEO TV channel.
Hamid Nawaz Khan also warned that there was a chance of the Taliban militants fleeing the Swat region in the guise of refugees as the Pakistani government has not put in place a tight system to screen refugees leaving the area.
A senior Western diplomat in Islamabad who spoke to CBS News on condition of anonymity concurred with that assessment. "The security conditions in Pakistan are already very precarious. The last thing we need is for the Taliban to get out of Swat and spread across Pakistan looking for targets," the diplomat said.
A second Western diplomat also based in Islamabad who also spoke on condition of anonymity agreed that the Swat operation "posed great risks to Pakistan." He warned the operation in Swat was not likely to be short term, which only exacerbated the risk. "This could go on for maybe weeks or longer. The danger is that this could become more and more messy as time goes by, especially if there are more suicide attacks, more and more refugees, and more and more domestic criticism of the government," the second diplomat concluded.
The decision to increase military attacks is widely seen in Pakistan as a response to growing pressure from U.S. president Barack Obama's administration which is keen for Islamabad to intensify the fight against Taliban militants. The ability of the Pakistani government to retake Swat is viewed inside and outside the country as a key litmus test for Pakistan's ability to roll back the growing challenge posed by Taliban militants.
Once a favored destination for honeymooning couples and tourists, Swat has seen increasing attempts by the Taliban to take control of the valley. In the past year, the Taliban have systematically attacked schools for girls in Swat to discourage parents from sending their daughters to school.