National state TV showed pictures of the blood-spattered streets of Midan district following the attack, which it blamed on “terrorists”.
Two weeks ago 44 people died in similar blasts the authorities also blamed on terrorists. Opposition activists accused the government of staging them.
Arab League monitors are in Syria on a month-long observer mission.
They are trying to ensure compliance with a peace plan, but activists say a Syrian government crackdown has continued, with scores of people killed.
A resident of Midan – the scene of reported anti-government protests in recent weeks – told Reuters news agency that ambulances were in the area.
Most foreign correspondents have been barred from reporting within Syria itself.
“Immediate information indicates that a suicide terrorist blew himself up at a traffic light in the Midan neighbourhood,” Reuters news agency quoted state television as saying.
According to Syrian authorities, most of those killed were civilians, but some security personnel were among the casualties.
TV pictures showed the shattered blood-splattered windows of what appeared to be a bus carrying policemen.
The Syrian government blamed a similar bombing two weeks ago on al-Qaeda, but no proof has been offered. Damascus blames the wider protests and violence in the country on Islamist militants.
Many observers are skeptical of those claims and opposition groups accuse the Syrian leadership of staging the blasts to try to influence Arab League observers, who are in the country to monitor the ongoing violence.
Burhan Ghalioun – the head of the main opposition group, the Syrian National Council – said he feared the observers could be providing political cover for the regime to suppress street protests.
Opposition activists have urged Syrians to take to the streets in mass protests ahead of an Arab League meeting in Cairo on Sunday, which will debate the initial findings of the observer mission.
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