A Bangladeshi immigrant is being held after an attempted terror attack at New York City's main bus terminal.

Akayed Ullah, 27, is accused of strapping a crude pipe bomb to his body and detonating it during rush hour Monday in an attack in which only he was seriously wounded.

Three other people suffered minor wounds.

Bangladesh's government condemned the attack and released a statement declaring their policy of zero tolerance against terrorism.

Ullah, who was living in Brooklyn, arrived in the US in 2011 and the Department of Homeland Security said he's a lawful permanent resident.

He came to the US on a visa issued to him based on a family connection to a US citizen.

A White House spokeswoman said the incident shows the need for "immigration reform".

Law enforcement officials familiar with the investigation said Ullah had looked at Islamic State group propaganda online and told investigators he was retaliating against US military aggression.

Ullah, whose family said in a statement that it was heartbroken, is not believed to have had any direct contact with the group.

Mayor Bill de Blasio said all of the victims had suffered minor injuries.

"Thank God the perpetrator did not achieve his ultimate goal," he said.

Footage has emerged showing the suspect walking through the crowded underpass before a plume of white smoke appears and the explosion sends commuters running.

As the smoke clears, the suspect can be seen laying crumpled on the ground.