The Indian official is held with a letter and a valid Pakistan visa and some documents, reported a television channel.
Officials said that they traced mobile phone calls made by the alleged Indian spy - who has identified himself as Satish, and have arrested him. Some of the reports claimed that the arrested had earlier worked with the Indian High Commission in London for three-and-a-half years before arriving in Pakistan with a visit visa.
The TV channel quoted sources saying that three identity cards have been recovered from Satish and that he had tipped the Pakistan police of three other Indian spies who are also present in Pakistan.
A woman was killed and four persons were injured when a car bomb went off in a high-security residential complex for government officials in the eastern Pakistani city of Lahore.
The explosion occurred at 9.20am within the Government Officers Residences complex, an area in the capital of Punjab province where senior government officials and judges reside.
OneIndia News (With inputs from Agencies)