A Home Ministry spokesman said in New Delhi that the country-made bomb went off "accidentally" when some miscreants were making the explosive in their hut at around 1840 hours in Idinagarai Tsunami colony, about 15 km from the nuclear power plant.
Among the dead were a woman and three children who were all aged below five, police said.
A senior official of the Department of Atomic Energy said the plant is running fine and is safe.
Two houses were razed under the impact of the blast, they said, adding rescue teams rushed to the pot to clear the debris and extricate people believed trapped under it.
People of Idinthakarai, the hub of protests against KNPP, backed by People's Movement Against Nuclear Energy, have been agitating for more than two years, demanding its closure.
Unit-1 had attained criticality on July 13 this year following protests against the project by anti-nuclear activists in areas around the complex, citing safety reasons.
Police had raided Kunthankuli village near Idinthakarai in 2012 and early this year and seized some country bombs from some huts.
Police suspect that some people involved in criminal cases from Kunthankuli were staying in the two houses.
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