The blaze started around 3 pm in the factory located around 10 kms from the district headquarters in the Kotwali police station limits, Additional Director General of Police (Balaghat range) G Janardhan told PTI.
According to Balaghat district collector Bharat Yadav, out of 10 workers injured in the incident initially, three died on their way to Nagpur, taking the toll to 23.
"Of the seven injured, five have been rushed to Nagpur (in Maharashtra) for treatment, while two are being treated at a hospital in the district," he said.
The cracker factory was owned by one Waris Ahmed and was being run legally, Yadav said.
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He added that the victims were workers of the factory and the incident took place when the production was on.
According to Yadav, the blaze has been completely doused and the rescue operation is also over.
"Exactly what triggered the fire is yet be known. It is possible that someone might have thrown a burning beedi," he said.
Yadav said the factory was located away from the human settlement.