Witnesses described the scene at a Taiwan water park as "hell" after a ball of fire ripped through a crowd on Saturday, burning nearly 500 people, almost 200 of them seriously.

The blast was caused as colored powder being sprayed on the partygoers ignited.

Horrifying amateur video footage showed crowds of young revelers dancing in front of a stage and cheering as clouds of green and yellow powder covered them at the "color party".

But their joy turned to terror when the powder suddenly burst 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 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 led away from the stage.

Around 1,000 spectators were at the Color Play Asia event at the Formosa Fun Coast water park, just outside 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 realized there was something wrong and people started screaming and running."

The number of party revellers injured in the fire was put at 498 on Sunday as authorities began investigating the cause.

The severely wounded are being treated in intensive care units at 37 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 color powder inhaled," Lee said.

"The next 24 hours will be critical for those severely injured."

Ma Xiaoguang, spokesman for the State Council Taiwan Affairs Office, said mainland authorities expressed sympathy for the injured cross-Straits compatriots and hoped they would receive timely and proper treatment.

The mainland's Association for Relations Across the Taiwan Straits has contacted Taiwan's Strait Exchange Foundation, expressing wishes to provide all the possible assistance for the disaster rescue and relief, said the spokesman.

AFP - Xinhua