Russia's nuclear agency has said an explosion during missile testing in the Arctic left five workers dead and involved radioactive isotopes after a nearby city recorded a spike in radiation levels.

Rosatom said the force of the explosion on Thursday blew several of its staff from a testing platform into the sea

Russia's military did not initially say that the accident involved nuclear equipment, but stressed that radiation levels were normal afterwards.

Officials in the nearby city of Severodvinsk nonetheless reported that radiation levels briefly increased after the accident.

The incident occurred in the far northern Arkhangelsk region during testing of a liquid propellant jet engine when an explosion sparked a fire, killing two, a defence ministry statement said.

It was not known whether those two deaths were among the five that Rosatom reported.

Russian state news agencies quoted a defence ministry source as saying both defence ministry and Rosatom employees had been killed.

Rosatom said its staff were providing engineering and technical support for the "isotope power source" of a missile.

The missile was being tested on a platform at sea when its fuel caught fire and triggered an explosion, Rosatom said in a statement quoted on Russian television.

Several staff were blown into the sea by the blast, the nuclear agency said, adding that it only announced the deaths once there was no more hope that the employees had survived.

The accident left three other people with burns and other injuries, Rosatom said.

Authorities initially released few details of the accident at the Nyonoksa test site on the White Sea, used for testing missiles deployed in nuclear submarines and ships since the Soviet era.

The defence ministry said six defence ministry employees and a developer were injured, while two "specialists" died of their wounds.

Professor Jeffrey Lewis of the Middlebury Institute of International Studies said his "working hypothesis" was that the blast "was related to Russia's nuclear-powered cruise missile, the 9M730 Burevestnik (NATO name: SSC-X-9 Skyfall)." 

Authorities in Severodvinsk, 30 kilometres from the test site, said Thursday on their website that automatic radiation detection sensors in the city "recorded a brief rise in radiation levels" around noon that day.

The post was later taken down and the defence ministry said radiation levels were normal after the accident.

A Severodvinsk civil defence official, Valentin Magomedov, told TASS state news agency that radiation levels rose to 2.0 microsieverts per hour for half an hour from 11:50 am (0850 GMT).

This exceeded the permitted limit of 0.6 microsieverts, he added.

Greenpeace Russia published a letter from officials at a Moscow nuclear research centre who gave the same figure, but said higher radiation levels lasted for an hour. 

The officials said this did not present a significant risk to public health.

Ankit Panda of the Federation of American Scientists noted on Twitter that the missile "is suspected to have some sort of a miniaturized reactor in its propulsion unit," and added: "a crash likely resulted in not-insignificant radioisotope dispersion."

Russian online media published an unattributed video which reportedly showed ambulances speeding through Moscow to a centre that specialises in the treatment of radiation victims.

Rosatom said the injured were being treated at a "specialised medical centre".

An expert from Moscow's Institute for Nuclear Research, Boris Zhuikov, told RBK independent news site that isotope power sources are not normally dangerous for people working with them.

"If they are damaged, people who are nearby could be hurt. Isotope sources use various types of fuel: plutonium, promethium or cerium," Mr Zhuikov said.

The radioactivity levels involved are "absolutely not comparable with those during serious accidents at reactors," he added.

But news of the accident prompted Severodvinsk residents to rush to pharmacies for iodine, which can help prevent the thyroid gland from absorbing radiation.

"People started to panic. Within a matter of an hour all the iodine and iodine-containing drugs were sold out," pharmacist Yelena Varinskaya told AFP.

In 1986, the Soviet Union suffered the world's worst nuclear accident at Chernobyl, a disaster that authorities initially tried hard to cover up.