A powerful explosion in an under-construction building in Lahore's busy Defence Y Block Market left 10 people dead and more than 20 injured on Thursday.

There were conflicting reports regarding the nature of the blast. Punjab government authorities initially claimed that the blast was the result of a "generator explosion", but multiple sources, including Nayab Haider, a spokesman for Punjab police, later said the explosion was caused by a bomb.

A spokesperson for the Punjab Counter-Terrorism Department (CTD) corroborated the claim, saying that the blast "seems to have been made [sic] by some explosives".

"It will become clear later whether it was IED timer [a timed improvised explosive device] or [a] remote-controlled device [and] whether the restaurant itself was [the] target or the explosive went off in transit," the spokesperson said.

"Since building has collapsed, true picture will emerge later on," the spokesperson added. "Info will be shared with media as early as possible."

Edhi sources confirmed that 10 people had died, with two bodies later recovered from the rubble.

The area where the first blast occurred is a busy locality with several commercial offices and eateries. Footage shows nearby offices including HBL, Toni and Guy, Gloria Jeans, Bombay Chowpatty, Jalalsons among others.

Extent of damage

TV footage showed windows of several offices and eateries in the commercial area shattered by shockwaves and shrapnel.

Footage also showed rubble from the damaged building strewn across the road. Windscreens of cars parked over 100 feet away from the building were shattered and there was considerable damage to the cars' bodies.

Residents and nearby shoppers panicked when the explosion was heard, and eyewitnesses described people evacuating buildings and running from the scene of the incident.

Broken crockery and furniture was strewn on the road in the area and the road appeared to be carpeted by shattered glass.

'People were crushed'

A Rescue 1122 official initially said as many as 35 people were moved to local hospitals, some with critical injuries. "The injuries are severe... the magnitude of the blast — the impact — is very high. One storey collapsed and people were crushed underneath."

A witness who works at a bank in the market told Reuters that his workplace was shaken by a “frightening” explosion.

“We left the building and saw that the motor-bikes parked outside were on fire and all the windows in the surrounding buildings were shattered,” the witness, Mohammad Khurram, said.

Search operation ongoing

The market was sealed by law enforcement personnel for a search operation. Teams from the Punjab Forensic Science Laboratory were dispatched to collect evidence.

Parents were also told to take their children back home as schools in the area had been asked to shut down for the day, DawnNews reported.

CCTV footage was requested from all shops in the area. DawnNews reported.

Punjab law minister Rana Sanaullah said after the blast that: "There was no reason to target the building. I have been informed that plaza was not inaugurated yet."

The report of the blast came as cities across Pakistan were put on high alert after a spate of deadly terror attacks.

A day earlier, the military announced a massive urban counter-terrorism operation after a week of bombings in Punjab, Sindh, Fata, Khyber Pakhtunwa and Balochistan took at least 100 lives.

Scenes from the blast site