The explosive was thrown by one of two men on the back of a motorbike at customers at a crowded bar called Tandoori in the Indian Ocean town of Diani, south of Mombasa.

The attackers fled before police arrived at the scene of the blast which took place in the early hours of Thursday.

At least one of the victims was seriously injured and underwent surgery at a nearby hospital."We had an explosion at the bar and about 10 people were injured," said Jack Ekakuro, the local police chief.

"It cannot be anything else but a terrorist attack. A grenade is a not a maize cob that any village boy can handle and throw around at will."

It was not yet clear who was responsible for the attack, but the government has in the past put the blame on Somalia's al Qaeda-linked al Shabaab insurgents.

They have been demanding the withdrawal of Kenyan troops who have joined African peacekeepers fighting the group in Somalia.

Kenya's coast is dependent on tourism and has been plagued by attacks blamed on Islamist militants and their sympathisers.

In September, al Shabaab gunmen attacked a attacked a Nairobi shopping mall, killing at least 67 civilians in the country's worst incident since the 1998 bombing of the US embassy that killed more than 200 people.