The two children were stated to be critical in the incident, which took place on the Ludhiana-Delhi national highway, they said.

Inspector Guljinder Pal, the SHO of Sahnewal Police Station, said that the explosion occurred during the Saraswati Puja being held early Wednesday morning.

The impact of the explosion was so intense that it tore into the walls of the area where the families of the migrant labourers lived, he added.

The fire was controlled and doused after a long struggle by the residents of the area, police said.

The children playing in the area were engulfed by the fire, they said.

Only three injured persons have been identified so far, police said.

All the injured have been admitted to the local civil hospital, they said, adding the two critically injured children have been referred to PGI Chandigarh for treatment.      

Those who received burn injuries have been identified as Sahil (10), Sakshi (11) and Pawan Kumar (29), police said.