A letter bomb exploded at the London headquarters of the company which administers the British capital's traffic congestion toll, injuring one woman employee.

The services company Capita, which also processes the payment of television licences, said in a statement: "Capita can confirm a small incident at its Victoria Street office this morning, involving an incendiary device."

Capita Group collects 25 million payments a year from motorists who pay to use the streets of central London.

Britain's benchmark FTSE 100 share index lost 13 points after the explosion but later recouped some ground.

Police said the area was cordoned off after they received reports of a suspicious package at the office in an imposing red brick building.

"One woman, an employee in the premises, was injured and taken to a local hospital where she is currently being assessed but we think that the injuries are fairly minor," police Chief Superintendent Ian Thomas said.

A London ambulance spokesman said an ambulance crew had treated the woman before taking her to hospital. Fire crews set up a 50-metre exclusion zone around the scene, a Fire Brigade official said. Police sent in sniffer dogs to the street, one of the main arteries in central London, which was plunged into traffic chaos.

Police said a small package or a letter had exploded at the office, which is not far from the Scotland Yard police headquarters on the busy street that leads from Victoria railway station to Parliament.

A police source said: "The key for us is to find out who the letter or package was addressed to."

The injured woman was believed to have suffered injuries to her hand and cuts to her body, the source said.