The blast, less than a mile from the residence of Mahinda Rajapakse, the Sri Lankan president, came hours after the air force attack in the north-east, which the rebels said killed 61 schoolgirls aged 15-18 and injured 155.
It also came as the rebels and military fought artillery battles in the far north in the worst fighting since a 2002 truce. The blast in the capital, Colombo, was the second in a week.
"Definitely it's an LTTE [Tamil Tigers] attack to the Pakistan ambassador's car, but they missed and the back-up vehicle got caught," a military spokesman said.
Four military personnel and three civilians were killed in the blast, which bomb squad officials said was caused by a fragmentation mine inside a three wheeler taxi. Seventeen others were injured.
According to police investigators, a resident in the area where the bomb blast took place had called the police emergency number to report a suspicious three wheeler being parked on the side of a road. Despite the phone call, local officers were not notified about the vehicle.
Why the Pakistan convoy may have been targeted remains unclear, although the High Commissioner said it could be because Islamabad backed Sri Lanka diplomatically.
One diplomat said there was a specific threat against him, and believed the attack was intended as a warning. "It is perhaps because we support the [Sri Lankan] government," Bashir Wali said. "We are against terrorism everywhere. It is all in that context, I think."
A defence analyst offered other theories.
"Pakistan has been providing military hardware to Sri Lanka for some time," he said, adding: "I wouldn't rule out mistaken identity [either]. It could be an opportunistic attack when they saw the military people in the car."
The rebels said earlier the air force had deliberately targeted schoolchildren as they were taking a first aid course, in the worst single loss of civilian life since fighting flared three weeks ago.
The military dismissed the claim, saying jets had bombed a rebel training camp and killed 50-60 Tiger fighters. The military posted a photograph on its website which it said depicted Tamil schoolgirls taking part in weapons training.
Nordic truce monitors said they had seen the bodies of 19 youths, both male and female, aged 17-20 and said the site did not appear to be a rebel training camp. They said the orphanage building itself was still standing, and any orphans had been moved elsewhere some time ago.
Aid workers estimate about 100,000 people have been displaced during three weeks of fighting.
Dozens are confirmed dead, and many fear the eventual death toll will be far higher.
On Monday the government accused the rebels of shelling civilian areas in the northern Jaffna peninsula, saying it feared fatalities.