A state of emergency has been declared in Meiktila, in central Myanmar, where 20 people died as continuing violence have sparked fears of spreading unrest, the Associated Press reported.

The riots between Buddhists and Muslims in Meiktila, about 336 miles north to the commercial capital Yangon, spread to the neighboring villages as armed mobs torched villages and ransacked houses, triggering fears that sectarian violence is spreading to the mainland.

The violence erupted after a dispute between a Buddhist couple and Muslim owner of a gold shop spiraled into a sectarian clash between the two communities.

A media report quoting fire officials said at least one mosque, an Islamic religious school, several shops and a government office were set ablaze, while Reuters confirmed that it saw both Buddhist and Muslim homes burned.

“The area was like a killing field,” a news photographer, Wunna Naing told the New York Times. “Even the police told me that they could not handle what they witnessed. Children were among the victims.”

Ethnic violence in Meiktila has raised concerns over the spreading of bloodshed to central Myanmar, as so far the sectarian violence was limited to Rakhine state in western Myanmar.

"Everyone is in shock here. We never expected this to happen," said a Muslim teacher in Mandalay, another town in Myanmar with a sizable Muslim population, requesting anonymity, Reuters reported.

More than 150 people, most of them Muslims, were killed since June in Buddhist-Muslim clashes in Rakhine State. More than 120,000 people — most of them Rohingya Muslims — were left homeless in the violence orchestrated by Buddhist ethnic groups.

The sectarian violence has become a serious challenge to the two-year-old democracy in Asia, as President Thein Sein government is struggling to check the escalating violence rooted in religious hatred.

According to media reports security agencies failed or refused to stop the violence.

Nyan Lin, a former political prisoner, told the Mizzima news agency that the police “just stood watching the rioters, and did not take any action.”

Locals also complained there were too few police to control the unrest, Reuters reported.

Violence in Rakhine state against Rohingya Muslims was internationally condemned and the United Nations had warned that sectarian riots could destabilize the country and endanger a reform program launched by the civilian government.

"Religious leaders and other community leaders must also publicly call on their followers to abjure violence, respect the law and promote peace," Vijay Nambiar, a U.N. special adviser of the secretary-general, said in a statement.

Myanmar, formerly known as Burma, comprises of a majority Buddhist population constituting 90 percent, while five percent of its population is Muslims and rest comprise Christians and animist.

Sectarian conflicts are common in the ethnically diversified country, but were suppressed during the military rule.