Five others were taken to hospital and one remains in critical condition, Leicestershire Police said.
The sudden blast took place at 7pm on Sunday about a mile west of the city centre and saw police cordon off around 60 homes on Carlisle Street and Hinckley Road.
Leicestershire Fire and Rescue sent six fire engines to the scene, and said the building had suffered a “pancake collapse”.
Firefighters worked through the night to dig through rubble and tackle the explosion’s subsequent blaze.
Police believe there may still be people unaccounted for after the incident, and emergency crews are continuing a “search and rescue” operation at the site on Hinckley Road.
Residents reported hearing a low booming sound and feeling their houses shake when the explosion occurred.
The three-storey shop at the centre of events on Hinckley Road, with a residential flat situated above it, suffered a “pancake collapse” as a result of the incident, according to a fire and rescue spokesman.
Superintendent Shane O’Neill, of Leicestershire Police, said: “There are now five confirmed fatalities and a number of people still undergoing treatment in hospital.
“The building consisted of a shop premises on the ground level and a two-storey flat above it. We believe there may be people who have not yet been accounted for and rescue efforts continue in order to locate any further casualties.
“Although the cause of the explosion is not yet known, there is no evidence that this is linked to terrorism.”
Updating the media on the rescue operation, Leicestershire Fire and Rescue Service group manager Matt Cane said parts of the building were being shored up as the search continued.
Describing conditions at the blast scene as very hazardous, Mr Cane said: “Unfortunately during our operations over the past few hours we have located five bodies within the remains of the building.
“At this stage our search and rescue operations carry on in the hope that there’s a possibility that people are trapped within any of the voids. But obviously as time goes on, that becomes less likely.
“We are slowly and methodically trying to make the area safe and get into the areas where we could potentially find further casualties.”
Andrew Brodie, the assistant chief fire officer for Leicestershire Fire and Rescue Service, earlier described the “tremendous effort” of crews as they continued to dig through rubble and tackle the blaze.
Mr Brodie also said on Twitter that work was continuing to ensure those directly affected by the incident were being looked after.
He had earlier described conditions for firefighters as “arduous” on a “bitterly cold night”.
Residents living in the streets off Hinckley Road rushed to help those caught up in the blast, including a young boy who was heard crying in the rubble.
Tony Hartley, who lives around 50 yards away from the blast site, told the Press Association: “Me and a friend lifted up a steel girder with about five other blokes and removed a bloke from underneath it.
“We then turned round, saw rubble and heard a little boy crying. There was me and another bloke sifting through the rubble and we managed to pull the little boy out.”
Mr Hartley said the boy, thought to be aged between 10 and 13, was able to walk after being freed.
Lee Blankley, who lives in nearby Minehead Road, said his bed shook and “felt like it was going in the air” as the blast occurred.
“Then I had a phone call straight away from a neighbour,” he said. “She was screaming. She had gone in shock. I ran down to the top of the street to see if I could help but there were already loads of people there.”
Witness Tahir Khan said: “I was driving past when it happened.
“Loads of people were gathered and there was gas and flames coming out of the building.
“I looked on the road and half the building was on the road. Literally the whole of the side of the building had been blown out.
“I couldn’t believe it, it was like a Hollywood movie.”
Speaking to Sky News, Kat Pattinson, who lives on the same road as the fire, said: “We are down the same street – about 500 metres from where the blast has taken place and our whole house shook.
“We checked on our children first and foremost and then we went outside.
“There is just an awful lot of smoke here at the moment and the whole area is cordoned off.”
One BBC journalist, John Alexander, said: “I live about 80 yards away from where it happened.
“I felt a tremor, what felt like an earthquake shock and I heard a very low boom that sounded like a very, very fast release of pressure.
“I thought my house was going to fall down on top of me and all my neighbours have said the same thing.
“I saw one guy get pulled out and he’ll be very lucky if he wasn’t killed.”
Police said an investigation will take place to establish the cause of the explosion.
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