Karakoram Express - travelling from Lahore to Karachi - derailed near Bandhi station, some 30 kilometres from Nawabshah.
Railway officials said the incident took place due to technical fault at a railways crossing point.
Three persons were killed in the accident while 20 others suffered injuries.
The government has announced compensation of Rs 5 lakh to the heirs of each deceased and Rs 1 lakh each for the injured passengers.