Earlier, SP Imran Awan confirmed that more than nine bodies were shifted to the hospital. At least three of the deceased people are policemen, he added.
According to Awan, an anti-encroachment drive by Lahore Development Authority was underway in the area when the explosion took place. The anti-riot police officials were deployed for the drive.
The injured include at least six policemen. Rescue teams have shifted them to nearby hospitals where emergency has been imposed.
Police and other law enforcement personnel have reached the site of the incident and cordoned off the area. Forensics teams have started collecting evidence from the blast site, after which the nature of explosion will be confirmed.
The area where the explosion occurred is a busy locality near the office of Punjab chief minister.
Two vehicles, including one motorcycle, have reportedly been damaged in the incident.
Provincial Law Minister Rana Sanaullah, while talking to the media, said that the incumbent government has overcome the menace of terrorism by 70 to 80 percent.
We have started the operation against terrorist organisations and the situation is much better as compared to what it was 2011-12, Sanaullah added.
Lahore has been the target of terrorist attacks in recent months. A suicide blast on February 13 ripped through the camp of protesting chemists in front of the Punjab Assembly, leaving 13 people dead and 70 others wounded.
Last year, in a terrorist attack in Iqbal Park targeting those celebrating Easter, 72 people had died and over 300 had been injured.
Another blast, targeting a census team in April had resulted in deaths of 6 people, including 5 forces personnel.