The injury toll in the blast late yesterday, which came as coloured powder being sprayed on the partygoers ignited, more than doubled as officials began to track down victims who had taken themselves to hospital or been ferried there by others.
Horrifying amateur video footage showed crowds of young revellers dancing in front of a stage and cheering as clouds of green and yellow powder covered them at the "colour party".
Some were dressed only in swimwear and images from the scene show many with severe burns being tended by those who escaped.
One male student who sustained minor injuries described the scene as "hell".
"There was blood everywhere, including in the pool where lots of the injured were soaking themselves for relief from the pain," he told reporters.
His visibly shaken girlfriend added: "I saw lots of people whose skin was gone."
Ambulances had struggled to reach the scene, and victims were carried away on rubber rings and inflatable dinghies as friends desperately tried to get them out.
Around 1,000 spectators had been at the Color Play Asia event at the Formosa Fun Coast water park, just outside the capital Taipei, according to officials.
One male witness told local news channel CTI: "It started on the left side of the stage. At the beginning I thought it was part of the special effects of the party but then I realised there was something wrong and people started screaming and running."
Lee Lih-jong, deputy chief of the health bureau of the New Taipei City government, said 519 people had been injured with 190 of them seriously hurt.
"The reason why the burns were so severe was that in addition to burns to the skin, there were also injuries caused by burns to the respiratory organs from the large amount of colour powder inhaled," Lee told AFP.
"The next 24 hours will be critical for those severely injured.