An organisation calling itself Muslims Against Global Oppression (Mago) later claimed in a call to a local radio station that it was responsible for the explosion in the crowded restaurant. The blast, it said, was in retaliation for the controversial US attacks. Islamic militants were accused by the Americans of being responsible for bombings at its embassies in Tanzania and Kenya in which more than 250 people died.
A man claiming to belong to Mago said the organisation intended to "fight fire with fire". One woman died in last night's blast, and there were unconfirmed reports that a second person had been killed.
A group calling itself Mago mounted an anti-American protest during President Bill Clinton's visit to Cape Town last March. Its members burned a US flag and shouted that President Clinton was a killer.
If the telephone call was authentic, the attack marks a worrying development in the war between the US and Islamic terrorists. It suggests that any business or individual with any connection with the US is considered a legitimate target.
There are about 60 Planet Hollywoods around the world, including London. The chain is part owned by the Hollywood stars Bruce Willis, Demi Moore, Sylvester Stallone and Arnold Schwarzenegger. But, although it has a distinctly American flavour, the chain was actually started by a north Londoner, Robert Earl, seven year ago.
Last week, the US said Americans abroad should be on their guard for possible reprisals. A US embassy spokesman said last night that the Washington administration had been informed of the attack, but added: "At this point we don't have enough information to offer any reaction."
Police Senior Superintendent John Sterrenberg said that the device exploded at 7.20pm in the restaurant, which was packed with diners.
Witnesses said they saw people being carried, from the building, covered in blood. One woman, too distraught to give her name, said she saw a woman whose legs appeared to have been blown off. Another witness, Joe Kroukam, said that he and a partner had been having dinner in a section that was not badly damaged. "We were sitting having supper and we heard a loud bang behind us. Then debris was falling down on our plates and I turned round and I saw all these people lying around with limbs missing. It was terrible," he said.
The nationalities and other details of the victims were unknown last night, but the Waterfront is popular with both tourists and residents.
Cape Town, the top tourist destination in South Africa, has a small but vocal Muslim community. Militants are in a minority but there are some local groups whose links with militant international Islamic organisations worry the police.
The city's most famous Islamic group is People Against Gangsterism and Drugs (Pagad), which has been repeatedly accused of attacks on the homes of drug dealers on the impoverished Cape Flats.
A spokeswoman for the US government said: "We are condemning in strongest terms what appears to be an outrageous and despicable attack on innocent people, and we are working closely with the South African authorities to develop information about the attack.
"We will co-operate closely with them to ensure that those responsible are brought to justice."Reuse content