Six foreigners and seven visitors from Hong Kong, mainland China and Macau were among those injured after about 1,000 people dancing at Saturday's event were sprayed with the powder, as a special feature of a festival also held in previous years.
The figure released late Sunday by local authorities was lower than an earlier estimate of 519 injured due to patients being transferred between hospitals and being double-counted, a government official said.
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The blaze, which broke out at around 8.30 p.m. at the Formosa Fun Coast water park on the outskirts of the capital, Taipei, is suspected to have been caused by an explosion of the colored powder, local government official Lin Chieh-yu told Reuters.
"It remains under investigation as to what made the powder explode," he said.
Authorities have banned the use of the powder until the investigation is completed and its safety can be assured.
"The next few days will be a critical time for the injured," Taiwan Premier Mao Chi-kuo told reporters. All of the 498 injured were still being treated in 43 hospitals across the island, according to the latest figures provided by the New Taipei City government.
In the immediate aftermath of the explosion, rescuers treated hundreds of people, most of them aged between 20 and 30, who wore wet swimsuits and lay on inflatable plastic doughnuts.
A video posted online by Apple Daily showed dancers in front of the stage engulfed in clouds of colored powder a moment before a fireball erupted, followed by pockets of flame, triggering panic and screams.
"There was blood and people were on fire," one injured man said.
No death has yet been reported, but victims suffered burns on limbs and torsos, with some passing out from the pain while others had burned clothes stuck to their skin, media reports and pictures showed.
"Her whole life is ruined," sobbed the father of Chu Li, an 18-year-old girl with burns on 80 percent of her body, during a visit by President Ma Ying-jeou to victims in a Taipei hospital.
Soldiers, army vehicles and medical services joined the rescue effort, while hospitals in four municipal precincts, along with Taipei, are treating sufferers.
The amusement park has been closed temporarily, it said on its website on Sunday.
Taipei has sweltered in temperatures exceeding 30 degrees Celsius (86 degrees Fahrenheit) in recent weeks.
By J.R. Wu and Pichi Chuang. Additional reporting by Faith Hung; Editing by Clarence Fernandez and Digby Lidstone
