More than 500 people have been injured after an explosion and fire during a concert at water park in Taiwan.

The blaze happened when a coloured powder being sprayed near a music stage ignited and turned into a fireball that swept through the 1,000-strong crowd.

Inflatable rubber dinghies were used to carry casualties away, or used as makeshift beds to treat the injured.

The country's Central News Agency reports that the fire happened at around 8.30pm local time at Formosa Fun Coast in New Taipei.

CNA says the fire was quickly brought under control.

Most of those injured were brought to nearby hospitals, with some receiving emergency treatment on site.

Reuters reports that 516 people are believed to have been injured, with more than 180 in intensive care.

Mayor Eric Chu called it the "worst incident of mass injury (ever) in New Taipei."

Formosa Fun Coast issued a statement about the incident:

"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."