The trouble began yesterday, when over 2,000 enraged Muslims gathered around Joseph Colony at Noor Road and pelted stones at the homes of 150 Christian families.
The mob was led by one Shafiq Ahmed, who claimed he was looking for a Christian named Savan Masih as he had allegedly committed blasphemy.
Though the mob could not trace Masih, some men found his 65-year-old father Chaman Masih and assaulted him. They then burnt Masih's home.
This morning, a mob of over 3,000 people stormed Joseph Colony, driving out all the Christian families. Members of the mob then vandalised and burnt scores of homes.
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Witnesses and local residents said policemen did nothing to stop them. Footage on television showed houses and cars on fire at Joseph Colony.
Smoke billowed out of the ruins of several houses as members of the mob stood watching on the streets.
Police officials said they had arrested 26-year-old Savan Masih on a charge of blasphemy.