At least four people including  two policeman were killed and seven were wounded in a bomb explosion and gun-battle on Thursday near a mass Eid prayer gathering in Kishoreganj in Bangladesh.

Bangladesh's second terror attack in a week took place 140 km from capital Dhaka, where seven terrorists stormed a popular cafe last Friday, killing 22 people.

A group of attackers reportedly attacked one of the policemen with a knife, and threw homemade bombs at a school about a kilometer from a prayer ground where at least 200,000 people were gathered to mark the start of Eid. The terrorists are believed to be hiding in the school.

"They threw a bomb at a police checkpost. A police constable was killed in the explosion. One attacker was killed and another was arrested," Mahbubur Rahman, a police officer in the district control room, told AFP.

Tofazzal Hosain, the district's deputy police chief, told AFP that several people had taken part in the attack and some had been armed with machetes - a hallmark of recent attacks in Bangladesh.

 

"They first threw a small bomb targeting police and then attacked them with machetes. Police retaliated by returning gunfire," Mr Hosain said.

Some reports suggest that the attack was targeted at the imam or chief cleric of Kishoreganj, who is known for his liberal views. He had reportedly started a signature campaign to condemn terrorism in the name of Islam.

'How can people attack those who have been doing namaz?' asked Prime Minister Sheikh Hasina.

Last weekend, 20 people, including 18 foreigners, were hacked to death at the Dhaka cafe.

Bangladesh has faced a growing wave of attacks since the turn of the year, many of which have been claimed by the Islamic State or an offshoot of the Al-Qaeda network.

Yesterday, the Islamic State terror group had issued a chilling video threatening more attacks, saying: "What you witnessed in Bangladesh was a glimpse. This will repeat, repeat and repeat until you lose and we win and the sharia is established throughout the world."

The Bangladesh government has denied that international jihadist networks have gained a foothold in the country and have said the Dhaka attack was carried out by members of a local outlawed Islamist group.