The number of those injured in the blast late Saturday, which came as coloured powder being sprayed on the partygoers ignited, more than doubled as authorities began to track down victims who had taken themselves to hospital or been ferried there by others.
Horrifying amateur video footage showed crowds of young revellers dancing in front of a stage and cheering as clouds of green and yellow powder covered them at the "colour party".
But their joy turned to terror when the powder suddenly erupted into flames engulfing them in an inferno as they ran screaming for their lives.
Some were dressed only in swimwear and images from the scene show many with severe burns being tended by those who escaped.
One male student who sustained minor injuries described the scene as "hell".
"There was blood everywhere, including in the pool where lots of the injured were soaking themselves for relief from the pain," he told reporters.
His visibly shaken girlfriend added: "I saw lots of people whose skin was gone."
Ambulances had struggled to reach the scene, and victims were carried away on rubber rings and inflatable dinghies as friends desperately tried to get them out.
Bystanders poured bottles of water on the scorched skin of the injured. Trails of bloody footprints leading away from the stage remained.
Around 1,000 spectators had been at the Color Play Asia event at the Formosa Fun Coast water park, just outside the capital Taipei, according to officials.
One male witness told local news channel CTI: "It started on the left side of the stage. At the beginning I thought it was part of the special effects of the party but then I realised there was something wrong and people started screaming and running."
Lee Lih-jong, deputy chief of the health bureau of the New Taipei City government, said 519 people had been injured with 190 of them seriously hurt.
The severely wounded are being treated in intensive care units at 37 different hospitals.
"The reason why the burns were so severe was that in addition to burns to the skin, there were also injuries caused by burns to the respiratory organs from the large amount of colour powder inhaled," Lee told AFP.
"The next 24 hours will be critical for those severely injured."
One father broke down as he told how his daughter was in intensive care with third degree burns.
"She was attending a music concert... why would there be an explosion?" he wept bewildered.
"More than 80 per cent of her body has been scorched," he told reporters.
The man, who was not named, lashed out at authorities saying they had not contacted him or offered any help.
The health bureau's Lee said details of the ages of the victims were not yet available, "but all looked very young, in their 20s or even younger".
Media reports said some victims had suffered burns to more than 40 per cent of their bodies.
"Our initial understanding is this explosion and fire... was caused by the powder spray. It could have been due to the heat of the lights on the stage," said a spokesman for the New Taipei City fire department.
Deputy fire chief Chen Chung-yueh said Sunday the blast may have been caused by "sparks from machinery or lighting equipment".
Five people including event manager Lu Chung-chi were detained by police.
They are now being questioned by prosecutors on charges of offences against public safety and negligence of duties that caused severe injuries, a police spokesman said.
Color Play Asia has also run other "colour parties" in Taiwan in the past two years.
Taiwan's premier Mao Chih-kuo, who visited the injured Sunday, ordered that all such events be banned unless their safety could be assured.