The State Department said that one private American citizen was slightly wounded in the explosion.
There were conflicting accounts of the death toll, with the State Department, from information provided by the U.S. Embassy in Beirut, saying four people had been killed and Lebanese authorities saying that only three had died.
"There was a private American citizen who was injured in the blast," he told reporters, adding that U.S. diplomats had spoken to the man who was being treated for non life-threatening wounds at a local Beirut hospital.
McCormack had originally said that no U.S. officials or U.S. citizens were injured or killed in the blast, reports CBS News State Department reporter Charles Wolfson.
He added that two embassy employees - including the driver - were in the vehicle damaged in the blast, which could be heard across the Lebanese capital and sent gray smoke billowing near the Mediterranean coast.
The driver was slightly wounded and the other staffer is fine, McCormack told reporters. He said no American diplomats or American citizens were in the car.
"My understanding is there were four Beirut residents who do not work for the embassy who were killed in the blast," he said. "Our thoughts and prayers go out to their families.
A senior Lebanese security official, speaking on condition of anonymity in line with military rules, told The Associated Press the explosion targeted the U.S. vehicle and was in the predominantly Christian Dora-Karantina neighborhood.
It came shortly before a farewell reception for departing U.S. Ambassador Jeffrey Feltman, which was being held at Beirut's seaside Phoenicia Hotel.
Secretary of State Condoleezza Rice called the bombing a "terrorist attack."
"The United States will, of course, not be deterred in its efforts to help the Lebanese people, to help the democratic forces in Lebanon, to help Lebanon resist force and interference in their affairs," she told reporters in the Saudi capital, Riyadh.
The bombing - which came as President Bush and Rice toured the Mideast - was the first attack on U.S. diplomatic interests in Lebanon since the 1980s, when the country saw some of the deadliest terror attacks against Americans in U.S. history.
McCormack could not offer specifics about the blast or whether the vehicle had been targeted, but said it had been hit directly "by the explosion itself."
He said agents from the State Department's Bureau of Diplomatic Security would be working with Lebanese authorities to investigate the blast and that the U.S. Embassy in Beirut was reviewing its security.
"We are going to take a look at what implications, if any, there are for our security posture in Beirut," McCormack said.
Television footage showed several damaged cars, including an SUV with tinted windows. Plainclothes security agents were seen removing an automatic rifle from the SUV.
Beirut has had a long history of attacks against Americans since the turmoil of the 17-year civil war, which ended in 1990.
At least 17 Americans, including top CIA officials in the region, were killed in a 1983 suicide bombing at the U.S. Embassy. Later that year, 241 American service members died in a massive truck bombing at the U.S. Marine barracks at Beirut airport.
The U.S. withdrew all diplomats from Beirut in September 1989 and did not reopen its embassy until 1991.
In the past three years, a series of explosions in Lebanon have targeted mainly anti-Syrian politicians and journalists.
The last car bombing on Dec. 12 in Beirut's suburb of Baabda killed Lebanese army Maj. Gen. Francois Hajj and two other people.
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