More than 510 revellers have been injured, about 180 of them critically, after an explosion in a recreational park in the Taiwanese capital Taipei.

The blast took place at the Formosa Water Park in Bali district reportedly after inflammable coloured powder sprayed onto the crowd exploded midair.

As many as 183 people are being treated in intensive care units in hospitals while 43 victims were released after treatment for minor injuries. Some of the victims sustained over 40% burns.

The water park outside the capital Taipei has been closed and further such parties have been banned pending investigations into what caused the fire.

The BBC reported that the event manager Lu Chung-chi and several staff were detained by police and were being questioned by prosecutors.

It said Lu was pictured in handcuffs. He is said to have apologised for what had happened and pledged to take responsibility for it.

Fire-fighters had quickly brought the fire under control, local reports suggest.

"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 police statement.

More than 1,000 revellers were at the amusement park when the incident took place.

"There was blood everywhere, including in the pool where lots of the injured were soaking themselves for relief from the pain," a male student, who suffered minor injuries, told AFP.

A video from the site shows a massive fire abruptly engulfing the stage following which panicked people run for their lives.

"We are very regretful (for) this accident that caused injuries to many victims. The most urgent matter currently for us is to handle and assist with ... victims on the scene and work comprehensively with the New Taipei Fire Department," Formosa Fun Coast said in a statement.

More about Taiwan