Here are the latest developments:
Chief Minister of Parvaiz Khattak has said more than 100 children have been killed and more than 80 have been injured. There are fears that the toll could be even higher.
Soldiers have surrounded the building and are attempting to flush out the terrorists. Prime Minster Nawaz Sharif has left for Peshawar.
The Tehreek-e-Taliban Pakistan claimed responsibility for the attack and said six suicide bombers had attacked the school. Its spokesman Muhammad Khorasani told AFP, "They include target killers and suicide attackers. They have been ordered to shoot the older students but not the children."
Doctors at the Lady Reading Hospital in Peshawar said it received the bodies of three students and was treating 35 injured people. "Many are in the operation theatre now in critical condition, undergoing treatment," said a hospital official Ejaz Khan.
Doctors said most injured have been shot in head. The hospital has reported a shortage of blood and has sought blood donations urgently.
At the school, heavy gunfire and at least two blasts were reportedly heard from inside the school. Helicopters swooped overhead and a fleet of ambulances ferried wounded children to hospital.
The six armed attackers in military uniform entered the school from a graveyard and through the rear gate. They torched a vehicle, entered the school premises and started firing.
A teacher said the attackers targeted the school while exams were taking place. He told a private TV channel, "After half an hour of the attack, the army came and sealed the school... We were in the examination hall when the attack took place. Now the army men are clearing the classes one by one."
"We were asked to sit in the auditorium until the firing was over," said a child who was able to come out. Another said they were made to lie on the floor to dodge bullets.
The school on Peshawar's Warsak Road is part of the Army Public Schools and Colleges System, which runs 146 schools nationwide for the children of military personnel and civilians. Its students range in age from around 10 to 18.
Watch: Pak Plane's Landing Gear Catches Fire, Fliers Slide Down Mercy Petition Of Pak Terrorist Convicted In 2000 Red Fort Attack Case Rejected "Dukh Hota Hai": Shadab Khan On Fans Taunting Imad Wasim With "Babar Babar" Chants Karnataka's 100% Quota Bill For Kannadigas In Private Firms For These Posts Under-Fire Trainee IAS Officer Accuses Pune Collector Of Harassment Trainee IAS Officer Puja Khedkar Recalled To Academy, Training Put On Hold India Is A "Strategic Partner", Says Pentagon Biden Calls For Ban On Type Of Gun Used In Trump Attack Biden Pledges "I Am All In", Criticises Trump On Policy Track Latest News Live on NDTV.com and get news updates from India and around the world.