The explosion - a suspected suicide bombing - is thought to have been caused by more than a tonne of explosives and police are warning that the hotel could collapse.
The BBC's defence and security correspondent, Rob Watson, says that the attack bears the hallmarks of al-Qaeda, given the scale, the target and what would appear to be the careful political timing involved.
The attack came just hours after the newly elected President Zardari had given his first speech to MPs, vowing not to allow Pakistan's territory to be violated by terrorists or foreign powers fighting them.
Our correspondent says the attack is without doubt the most serious in the Pakistani capital to date and will spark fears about the country's stability in the face of a growing Islamist insurgency.
A huge area of the 315-room hotel remained on fire hours after the explosion.
The BBC's Barbara Plett, at the scene, said the emergency services were struggling to reach the upper floors of the hotel, where more people were feared trapped.
At least 100 people have been injured in the attack, among them four British citizens as well as Saudi, German, Moroccan, Afghan and US nationals.
A hotel employee, Mohammad Sultan, said he was in the reception when something exploded, forcing him to the ground.
"I don't understand what it was, but it was like the world is finished," he said.
There are reports that at least 200 people were in the hotel's restaurants at the time of the explosion, many breaking their Ramadan fast.
The Marriott is the most prestigious hotel in the capital, and is popular with foreigners and the Pakistani elite.
The hotel is located near government buildings and diplomatic missions, so security is tight, with guests and vehicles subject to checks.
The Marriott has previously been the target of militants. Last year a suicide bomber killed himself and one other in an attack at the hotel.
In an interview with the BBC, Senator Enver Beg, from the Pakistan People's Party, appealed to the international community for help in the struggle against terrorism.
"Pakistan is a frontline country in the war on terror. We are, again, with suicide bombings which are taking place all over the country.
"Our economy is affected because of these terrorist activities. And I think the international community has to come out and help Pakistan to fight against this terrorism," he said.
Pakistan has been a key ally of the US in its "war on terror"
US President George W Bush condemned the attack and said it was "a reminder of the ongoing threat faced by Pakistan, the United States, and all those who stand against violent extremism".
He said the US would "assist Pakistan in confronting this threat and bringing the perpetrators to justice".
UK Foreign Secretary David Miliband called the attack "disgraceful" and said it would reinforce Britain's resolve to fight violent extremism with Pakistan.
Pakistan has been a key ally of the US in its "war on terror", but relations have become strained over tactics.
In recent months Pakistan has voiced growing disquiet over US raids targeting militants in its territory, launched from neighbouring Afghanistan.
Al-Qaeda and Taleban militants based in Pakistan's north-west tribal region have repeatedly carried out attacks across the border in Afghanistan.
Militants have also carried out waves of attacks in Pakistan in recent years.
Just over a year ago, Pakistani army commandos stormed Islamabad's Red Mosque - also known as Lal Masjid - which had been taken over by pro-Taleban clerics.
The operation brought an end to the bloody siege. But Islamist militants responded with a wave of suicide bombings around the country that killed around 1,000 people.
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