Australian Foreign Minister Julie Bishop has confirmed two embassy security contractors were injured in the blast which killed up to three Afghan civilians.
The ABC understands the attacker targeted a convoy of four Australian embassy vehicles and detonated an Improvised Explosive Device while driving alongside them.
Ms Bishop said up to three Afghan civilians were killed in the suicide attack in Kabul on Friday and two Australians escaped with minor injuries.
"Our hearts and thoughts go to the families of those injured," Ms Bishop said.
The attack happened near Australia's embassy, in a gated part of Kabul that is popular with expats and also houses a military training centre.
Ms Bishop has confirmed embassy staff escaped unharmed but said she was "deeply concerned" about the safety of all people in the area.
"It does highlight the risk of terrorism and insurgent groups to the stability of Afghanistan," she said.
No militant group has claimed responsibility but it comes just two days after the Afghan President announced a fresh round of peace talks with the Taliban.
Kabul has endured a spike in violence in recent weeks, including a bomb planted in an ambulance which killed more than 100 people.