However, he further said that it is too soon to brand the explosion a terror attack.
Eye witnesses say that a bomb exploded in a parked motorcycle parked on the pathway at the main Ferozpur road near old vegetable market (sabzi mandi) of Lahore.
According to Dawn News, the three killed were anti-riot policemen.
President Mamnoon Hussain and Prime Minister Nawaz Sharif have expressed deep grief and sorrow over the loss of precious human lives in Lahore blast on Monday.
CM Punjab Shehbaz, whose secretariat is near to the blast site condemned the attack and vowed to provide the best medical treatment to the injured.
A spokesman for the Punjab provincial government, however, said the cause of the explosion was not known and authorities were still trying to establish the reason.
Punjab Government spokesperson told media that emergency is being announced in nearby hospitals.
Mr Ashraf added that a high-rise building housing important information technology offices is situated near the blast site, but the apparent target of the bombing was the police gathering.
He said at least 26 people, including nine policemen, were killed in the blast that also wounded 58 others. "We are collecting evidence, and it could be a suicide attack. right now, we can confirm 12 people have been killed, including policemen and civilians".
Lahore has been hit by significant militant attacks in country's more than decade-long war on extremism, but they have been less frequent in recent years.