The number of those injured in the blast, which came as coloured powder being sprayed on the partygoers ignited late yesterday, more than doubled as authorities began to track down victims who had taken themselves to hospital or been ferried there by others.
Footage on the Apple Daily newspaper website showed crowds dancing as music played and clouds of powder being sprayed out which suddenly turned into an inferno that tore through the spectators.
Ambulances had struggled to reach the scene, and the original figures had only counted those hospitalised by emergency services.
Victims were carried away on rubber rings and inflatable dinghies as friends desperately tried to get them out.
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Bystanders poured bottles of water on the scorched skin of the injured. Trails of bloody footprints leading away from the stage remained, an AFP reporter at the scene said.
The fire was quickly extinguished, according to authorities.
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 509 people had been injured with 188 of them seriously hurt.
The severely wounded are being treated in intensive care units at 37 different hospitals.
"The next 24 hours will be critical for those severely injured."
Lee said that 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.