At least 65 were killed, according to John Key, the prime minister.
Bob Parker, the mayor of Christchurch, added that more than 100 are believed to be trapped in buildings.
The Queen, who is also New Zealand's head of state, expressed her sadness at the 6.3 magnitude quake, saying she was "utterly shocked" by the news.
"Please convey my deep sympathy to the families and friends of those who have been killed; my thoughts are with all those who have been affected by this dreadful event," she said.
"My thoughts are also with the emergency services and everyone who is assisting in the rescue efforts."
A state of emergency was declared following the quake, which struck at 12.51pm on Tuesday local time (2351GMT Monday), when office blocks and shopping centres in the city centre were bustling with people.
Rescue workers scrambled to free scores of people trapped in buildings, some crews arriving by helicopter because streets were blocked by rubble and jammed traffic.
Officials fear the death toll could double amid reports that more than 200 were trapped in collapsed buildings and wreckage of homes. Bodies were seen lying in the streets, untended until emergency services were able to reach them.
A special "person finder" established by Google, the search engine giant, said it was currently tracking more than 3,600 "records".
Twelve Japanese students, from a foreign language school and originally from Toyama city, have been reported missing in the rubble of a Christchurch building.
Bystanders dug with bare hands to rescue survivors trapped under piles of rubble. Some reports said the city had ran out of ambulances, with rescuers forced to use private vehicles.
As night fell, welfare centres become full with locals who could not return to their homes. All Christchurch schools were closed until further notice.
Late on Tuesday the military was sent in to help with rescue efforts as rain started falling and temperatures fell.
Mr Key, the prime minister who has flown to the city, described what he saw as "utter devastation".
"We may be witnessing New Zealand's darkest day," he told reporters.
"The death toll I have at the moment is 65 and that may rise.
"So it's an absolute tragedy for this city, for New Zealand, for the people that we care so much about."
No area throughout the country's second largest city was considered safe as strong aftershocks sent dislodged masonry raining down on to the streets below. Power and water has been cut to most of the city.
All Christchurch schools and early childhood services are closed until further notice.
Police warned there would be "multiple fatalities" throughout the region and the fire service said numerous people were trapped and that two buses had been crushed. There were reports of bodied pulled from a youth hostel and bookshop in the city.
The Australian government quickly scrambled rescue and medical teams to area, the Prime Minister Julia Gillard announced.
William Hague, the Foreign Secretary, said Britain stood "ready to provide any assistance that we can".
“I was shocked and saddened to hear of the devastating earthquake that struck Christchurch earlier today killing so many people," he said.
"The ties that bind the UK with New Zealand are very close and my thoughts are with the friends and families of all those who have lost their lives and been affected by the earthquake.
“Many people in the UK with links to New Zealand will be watching anxiously as the situation develops."
He added: "Our High Commissioner in New Zealand is on her way to Christchurch and we stand ready to provide any assistance that we can to the authorities and to any British Nationals who have been caught up in the earthquake.”
Hundreds of doctors from around the world gathered in Christchurch for a conference are helping in makeshift hospitals established throughout the city.
The power of the quake, which was far more violent one that struck the city in September, caused the cathedral's spire in the centre of Christchurch to crumble and knocked out phone lines.
Several large building were reduced to piles of twisted debris, pipes burst across the city and large holes had appeared in roads.
The city's hospital and airport were evacuated and dozens of shocked and injured residents gathered in open spaces as alarms and sirens sounded across the city.
There were scenes of confusion and chaos as police tried to get people out of the city centre as the earth continued to shake during several strong aftershocks.
Streets were gridlocked, glass carpeted the pavements and power was out to 80 per cent of Christchurch.
Footage from the scene showed cars crushed underneath large piles of rubble and several seriously injured people being carried on makeshift stretchers from collapsed buildings.
Distressed people could be seen trapped inside damaged buildings and screaming could be heard as firefighters picked their way though the debris.
The earthquake caused a 30 million-tonne chunk of ice to break off from the Tasman Glacier, more than 150 miles away on the West Coast.
Bill English, the Deputy Prime Minister, said 35 military personal were on the ground providing first aid and support to the city's major most affected areas. Another 250 would arrive in first thing on Wednesday.
The chaotic scenes were far different from last September's "miracle", when no one was killed in a 7.1 magnitude quake.
Tuesday's much shallower quake, just two miles below the surface, caused several office blocks to collapse as well as destroying the 110-year-old Anglican cathedral. It has been described as the worst earthquake to hit the country in 80 years.
Bob Parker, the city's mayor, said the death toll could double. He urged residents to stay at home, conserve water and stay calm.
"We are in the middle of a major disaster on global terms," he said.
"There are people fighting for their lives at the moment but there are also people fighting for them.
"We're in the middle of an extremely serious situation."
He added: "We're preparing ourselves for what I think will be a really sad, bleak day for our city but be reassured everybody is doing what they can."
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