Rescuers desperately searched for survivors buried in the rubble of the four-storey block in a residential suburb of the eastern city, which also contained tenements, as heavy cranes lifted huge concrete slabs.

"I heard a deafening bang, then it seemed like the world fell in on me and then I passed out," Mohammad Mushtaq, 20, an employee at the ice cream factory, told AFP at the scene.

Mushtaq, who suffered superficial facial injuries, added: "The next thing I knew I was being pulled out of the rubble by rescuers several hours later."

Police said a truck was offloading the gas cylinders when the explosion happened at around 3:00 am (2200 GMT) in the densely populated Allama Iqbal Town area of Lahore. The truck and a nearby car were both obliterated.

"We have seen three more bodies buried in the collapsed structure so the death toll is now 27," Lahore mayor Mian Amir Mahmood told AFP. "We have an unknown number of people who are still under the debris."

Residents in the block had previously complained about the sale and storage of gas cylinders in the neighbourhood, Mahmood added.

"However this is a federal subject and as provincial government we could do nothing," he said.

At least nine ice cream street vendors and salesmen at an outlet adjoining the small factory died after they slept the night at the plant, Rana Mohammad Ashraf, an officer in charge of the local police station, told AFP. Their bodies were badly mutilated.

A further nine people were wounded, Ashraf added.

Witnesses said they could hear cries for help from people buried under the debris.

Around 50 emergency workers in fluorescent jackets clambered over the wreckage and scurried to hunt for survivors whenever the cranes and bulldozers uncovered another piece of debris. Gas cylinders were also recovered.

Television footage showed dazed survivors in ragged clothes being pulled from underneath the concrete. Hysterical relatives of the dead and missing wailed and tore at their hair nearby.

The dead included four women and two children. Seven of the fatalities were from the same family, Lahore police superintendent Mobin Ahmed told AFP.

The initial explosion on the truck spread to other cylinders stored in the basement, resulting in a huge explosion that "100 percent destroyed" the building, police officer Zubair Nawaz Chatha said.

"The blast was so powerful that it broke window panes of nearby houses," he said.

The administration of Punjab province, of which Lahore is the capital, announced compensation of 100,000 rupees (18,000 dollars) for the dead and 50,000 rupees for the injured.