The 6.4-magnitude quake struck in the middle of the night and as day dawned it revealed the destruction left behind in the city of Tainan, which bore the brunt of the damage.
An entire residential complex containing almost 100 homes toppled to the ground, lying on its side with twisted metal girders exposed.
A 10-day old baby girl and a 40-year-old man were pulled dead from the building, National Fire Agency officials said, with reports that around 30 more were still trapped inside.
Residents at the 16-storey felled Wei-kuan Building told of their terror as the quake hit.
"I saw buildings shake up and down and left and right," said one resident.
"The first and second floor just collapsed and I smelt gas and water was leaking," he told local channel SET TV.
Another man tied his clothes together to create a rope and lowered himself from his home on the ninth floor to the sixth floor below, Apple Daily reported.
"I used a hammer to break the door of my home which was twisted and locked, and managed to climb out," she told local channel SET TV, weeping as she spoke.
Rescuers have freed more than 200 people from the Wei-kuan building, with over 40 of them hospitalised.
Interior minister Chen Wei-jen said he feared there may be more people in the building than usual as family members would have returned to celebrate the Lunar New Year holidays next week.
"Exactly how many people were there when the quake hit was not immediately clear," said Chen.
Officials said there were 256 residents registered as living in the building, which contained 96 apartments.
Dazed and exhausted residents stood outside the toppled building, watching rescue workers take survivors from the rubble and carefully hand them down ladders.
Television footage showed two small children wrapped in blankets being plucked from the building.
As Premier Chang San-cheng visited the disaster zone, one elderly woman wept, saying her son, daughter-in-law and grandchildren were still trapped on the 15th floor, Apple Daily reported.
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