Zaffar Abbas reports live from Islamabad (BBC World)

The attack happened just after morning prayers for the Muslim holy month of Ramadan.

Police say four unidentified gunmen drove up to the crowded Shia mosque and opened fire on the worshippers, then fled.

They said the gunmen fired randomly at the congregation in Karam Dad Qureshi, a remote Punjab village some 35 km (21 miles) east of Multan.

The condition of some of the injured is critical and hospital sources say the death toll may rise.

The BBC correspondent in Pakistan says the attack has sent a wave of panic across many parts of the country.

There were demonstrations in Punjab and angry speeches in parliament about the government's failure to control sectarian violence between the majority Sunni and minority Shi'ite Islamic communities.

The government says it has set up a high-level enquiry.

Militant rivalry

The BBC's Zaffar Abbas in Islamabad: "A proxy war between two schools of Islam"

Police say the attack seems to be the latest in ongoing clashes between militant Sunni and Shi'a groups.

Several hundred people have been killed in recent years in attacks blamed on extremists from both sects.

The BBC correspondent in Islamabad, Zaffar Abbas, says there has been sectarian violence for many years in Punjab, with militants attacking one another's mosques in a tit-for-tat conflict.

Our correspondent says it is unlikely the shooting is connected with an assassination attempt on the Pakistani Prime Minister Nawaz Sharif on Saturday.

Senior officials said the only link between the two incidents was that both were "acts of terrorism."