(Updates with comment from witness, adds PICTURE tag)

By Syed Raza Hassan

ISLAMABAD, July 28 (Reuters) - A Pakistani mob killed a woman member of a religious sect and two of her granddaughters after a sect member was accused of posting blasphemous material on Facebook, police said Monday, the latest instance of growing violence against minorities.

The dead, including a seven-year-old girl and her baby sister, were Ahmadis, who consider themselves Muslim but believe in a prophet after Mohammed. A 1984 Pakistani law declared them non-Muslims and many Pakistanis consider them heretics.

Police said the late Sunday violence in the town of Gujranwala, 220 km (140 miles) southeast of the capital, Islamabad, started with an altercation between young men, one of whom was an Ahmadi accused of posting "objectionable material".

"Later, a crowd of 150 people came to the police station demanding the registration of a blasphemy case against the accused," said one police officer who declined to be identified.

"As police were negotiating with the crowd, another mob attacked and started burning the houses of Ahmadis."

The youth accused of making the Facebook post had not been injured, he said.

Resident Munawar Ahmed, 60, said he drove terrified neighbors to safety as the mob attacked.

"The attackers were looting and plundering, taking away fans and whatever valuables they could get hold of and dragging furniture into the road and setting fire to it... Some were continuously firing into the air," he said.

"A lot of policemen arrived but they stayed on the sidelines and didn't intervene," he said.

The police officer said they had tried to stop the mob.

Salim ud Din, a spokesman for the Ahmadi community, said it was the worst attack on the community since simultaneous attacks on Ahmadi places of worship killed 86 Ahmadis four years ago.

Under Pakistani law, Ahmadis are banned from using Muslim greetings, saying Muslim prayers or referring to his place of worship as a mosque.

Accusations of blasphemy are rocketing in Pakistan, from one in 2011 to at least 68 last year, according to the Human Rights Commission of Pakistan. About 100 people have been accused of blasphemy this year.

Human rights workers say the accusations are increasingly used to settle personal vendettas or to grab the property of the accused. (Additional reporting, writing by Katharine Houreld; Editing by Robert Birsel)