The explosion occurred as worshippers gathered for Friday prayers at the Kucha Risaldar mosque in Peshawar’s old city region.
Officials from the hospital claimed at least 56 individuals were killed, up from a previous estimate of 30. At least 194 individuals were injured, according to reports.
There was no immediate claims of the attack.
The incident began when two armed terrorists opened fire on police outside the mosque, according to Peshawar police head Muhammed Ejaz Khan.
During the gunfight, one assailant and one police officer were killed, while another officer was injured. The final assailant then entered the mosque and detonated a bomb.
A witness who identified himself as Naeem lives next door to the mosque.
“First I heard five to six gunshots and then I saw the suicide bomber enter the mosque and a huge explosion occurred,” told news sources. “The doors of my house opened with a bang and I fell down on the ground. When I entered the mosque, there was smoke and dust and people were lying in blood.”
The bomb disposal unit said about 5kg of explosives was used and ball bearings were added. Ambulances rushed through congested narrow streets and took the wounded to Lady Reading Hospital.
“We are in a state of emergency and the injured are being shifted to the hospital. We are investigating the nature of the blast but it seemed to be a suicide attack,” police officer Mohammad Sajjad Khan said.
Similar attacks have occurred in Peshawar 190km (120 miles) west of the capital, Islamabad located near the border with neighbouring Afghanistan.
Shayan Haider, a witness, had been preparing to enter the mosque when the powerful explosion threw him to the street.
“I opened my eyes and there was dust and bodies everywhere,” he said.
At the Lady Reading Hospital’s emergency department, there was chaos as doctors struggled to move the many wounded into operation theatres.
“I saw a man firing at two policemen before he entered the mosque. Seconds later I heard a big bang,” said witness Zahid Khan.
Retired army officer Sher Ali who had been inside the mosque at the time of the explosion was injured by flying shrapnel. He made an impassioned plea to the Pakistani government for better protection of the country’s minority Shia Muslims.
“What is our sin? What have we done? Aren’t we citizens of this country?” he said from the emergency department, his white clothes splattered with blood.
Prime Minister Imran Khan condemned the bombing.
In recent months, Pakistan has experienced an increase in violence. Dozens of military personnel have been killed in scores of attacks on army outposts along the border with Afghanistan.