About 40 people, including women and children, were injured, Punjab Health Minister Dr Yasmin Rashid told AFP earlier.
The dead and injured are being shifted to DHQ Hospital in Liaquatpur. Some of the injured have also been shifted to Bahawal Victoria Hospital in Bahawalpur due to their critical condition.
The train was bound for Rawalpindi from Karachi. The fire was caused by a cylinder blast that occurred in the morning when some passengers were preparing their breakfast, Railways Minister Sheikh Rashid said, adding that they belonged to a tableeghi jamaat and were headed towards Raiwand.
Many people saved their lives by jumping off the train, the minister said.
In a video message, Railways Minister Rashid announced that a compensation of Rs1.5 million will be paid to the heirs of the deceased while Rs500,000 will be provided to those who are injured. He travelled to the scene of the incident and will meet families of the victims and the injured.
He said that two of the coaches that caught fire were booked under the name of the tableeghi jamaat's emir Hussain. The ministry, he said, was preparing a list of the victims. Rashid said that it was a "failure" on the part of the Railways authorities since they failed to carry out thorough checking of the passengers' luggage.
Later, in a press conference, the railways minister said that 134 trains had been making a minute-long stop for passengers in Raiwind. "The whole world earns from freight and we are the only ones who earn from passengers," he said, adding that the ministry was now earning upto Rs180-190 million versus the previous Rs130 million figure. "And then this tragedy unfolded."
Speaking about the tragic incident, Rashid said that the passengers who had been using the cylinder had been stopped by a guard and the driver from doing so. "In front of the guard they turned off the stove, but when he left, they turned it back on."
The railways minister thanked all those who participated in rescue operations especially Pak Army ambulances who saved many lives by transporting them quickly to hospitals.
Rashid rejected the impression that there was a non-availability of "pull chains" to alert the driver to stop the train. "The train stopped due to the chain being pulled, otherwise the whole train would have been on fire."
When asked about whether he will resign from the ministry, Rashid said he will speak about the matter on Sunday. He said an inquiry will be conducted within 15 days and the parties responsible punished.
The minister also paid a visit to the Shaikh Zayed Hospital in Rahim Yar Khan where some of the injured were being treated. He instructed the hospital staff to ensure the best possible treatment to all those wounded.
The minister will also pay a visit to Combined Military Hospital (CMH) in Multan.
Nabila Aslam, a railways official, told DawnNewsTV that the passengers must have "hidden the gas cylinder in their clothes" while boarding the train, as carrying one was strictly against the rules.
Rescue 1122 teams have extinguished the fire and are now carrying out a cooling and search operation under the supervision of Rashid. Army troops including doctors and paramedics were also dispatched to assist rescue teams in the operation, a statement by the Inter-Services Public Relations said.
An Army helicopter was also dispatched from Multan in order to rescue the injured, the ISPR statement added further.