More people could be trapped in the debris of the buildings, comprising shops and residential flats, the report said.
It was not immediately known what caused the cylinders to explode, but police ruled out sabotage.
Police Superintendent Mobin Ahmed said cylinders were being filled when the blast occurred early on Tuesday.
"The three buildings collapsed after the blast and people of the neighbourhood came rushing out," he said.
Residents said about 40 people lived in the buildings and most of them would have been asleep at the time of the blast.
Rehan Butt, a neighbour, said residents of the middle-class neighbourhood had repeatedly complained to the local authorities about the threat posed by the gas facility, but no action had been taken against the owner of the business.
Gas-cylinder storage and filling stations can be found in many residential areas of Lahore, capital of the populous Punjab province, without any checks and safeguards.
Elsewhere on Tuesday, Pakistan police attacked journalists with sticks and detained at least 30 of them for staging a rally in the capital, Islamabad, witnesses said.
Authorities said police broke up the rally by about 50 journalists outside parliament to mark World Press Freedom Day because the government had banned such demonstrations.
Information Minister Shaikh Rashid Ahmed said the detained journalists would soon be released.
"It was an unfortunate incident. They will be released," he said. Journalists said that they had been holding a peaceful rally.