The blast in the city of Kandahar, which was near a motorcade carrying provincial governor Assadullah Khalid, injured more than a dozen people.
The suicide bomber detonated his explosives between Mr Khalid’s vehicle and a coalition patrol, coalition spokesman Major Scott Lundy said.
Although there were no coalition casualties, the Canadian military confirmed that one of its soldiers had suffered minor injuries from a collision between two military vehicles as they were leaving the scene.
The Afghan interior ministry said the bomber had killed himself and three civilians, and wounded 13 others.
"It was the work of the enemies of the government," ministry spokesman Yousuf Stanizai said, using a phrase that generally refers to the Taliban.
Mr Stanizai said that Governor Khalid, who has been critical of the Taliban movement in the province, appeared to have been the target of the attack.
But Mr Khalid rejected this.
"The explosion was in between our convoy and a coalition convoy. The attacker tried to pass us and we let him go. That means the target was not me, it was the coalition," he said.
Witnesses said the blast, which shattered the windows of several businesses, caused at least one shop to catch on fire. There were body parts at the scene.
Police targeted
In other incidents linked to the insurgency, Taliban members attacked a police station in Kandahar province, with the resulting battle killing four policemen and 18 rebels, Mr Khalid told reporters.
He said police in the same province also captured two men accused of rigging up car bombs and three militants suspected of attacks on police posts.
The coalition said it captured an insurgent suspected of building bombs in a cave near the Kandahar village of Gumbad, where Canadian forces have a base.
Suspected Taliban militants have also kidnapped four policemen from the western province of Farah, the provincial governor Izatullah Wasifi said.
The men were taken following a gun battle which erupted when more than a dozen rebels attacked the police checkpoint.
In the eastern city of Jalalabad, five people were arrested after 450 kilograms of explosives was discovered by a patrol near the city, security officials said.
NATO to control South
Meanwhile, security force NATO will double the number of its troops in southern Afghanistan when it takes over security from US forces, in an attempt to quash the worst rebel violence since the fall of the Taliban.
The forces' commander, Lieutenant-General David Richards, promised that the incoming soldiers would be more "people-friendly", in an effort to win the hearts and minds of the local population, amid rising resentment toward the US-led coalition over its aggressive tactics.
The British Lieutenant General Richards, who took command of NATO's International Security Assistance Force (ISAF) last month, said that the number of troops the coalition has in southern Afghanistan is not enough to deal with the violence.
"They have been relatively short of troops, of boots on the ground," he said.
Lieutenant General Richards said he expected the number of soldiers on the ground would double to about 6,000 when the ISAF takes responsibility for the volatile southern region.
Lieutenant General Richards has acknowledged that the security situation had deteriorated, but said he was optimistic his tactics would counter that trend.
"I have a different approach (to the US led coalition)… I want to get out much more on our feet in and among the villagers... We will gear our security operation around (building) more roads, irrigation, et cetera," Lt Gen Richards said.
But he warned that when needed his force will be tough.
"When we need to be muscular, robust with those opposing us, we have all the capability we need and we will certainly do so," he said.
The United States has raised its troop levels in Afghanistan in recent months from 18,000 to 23,000, but is expected to start withdrawing some of those soldiers once the ISAF takes over control of the south.
The move by NATO to control southern Afghanistan’s security situation is part of a plan for the multi-national force to assume control of security across the whole country.
Lt Gen Richards said that having one force responsible for all of Afghanistan would help quell the attacks by giving commanders more freedom to move troops to trouble-spots around the country.