At least seven more children were taken to hospital after the incident on the outskirts of the city of Gujrat.
Police said a compressed gas cylinder had exploded on the bus after fire broke out.
The bus driver is reported to have survived.
The children, aged between four and 10, were just a few miles from their school in Gujrat, about 120 miles south-east of the capital Islamabad, when the incident happened.
Police officer Dar Ali Khattak told the AFP news agency the fire was apparently caused by a spark when the driver of the dual-fuel bus switched from gas to petrol.
Two children who survived by escaping from a window in the back of the bus told reporters they had smelt gas before the fire broke out.
One boy said the other children were shouting: “Brother, save us, save us. We are burning.”
“I took a huge stick and broke the glass. I tried to save them but I couldn’t,” he said.
Compressed natural gas is used in millions of vehicles in Pakistan as a cheaper alternative to diesel and petrol.
Numerous previous vehicle explosions have been blamed on substandard cylinders used to contain the fuel.
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