A Pakistani court acquitted 112 suspects in the 2013 torching of hundreds of Christian homes in the eastern city of Lahore over a rumour that one of the residents there had blasphemed, a lawyer said on Sunday.

In March 2013, more than 125 homes in Lahore's Josep Colony were burned by a mob of more than 3,000 Muslims responding to rumours that a local Christian man, Sawan Masih, had made derogatory remarks about the Prophet Mohammad.

No one was killed in the incident but there was widespread damage to the property of the mostly destitute Christians living in the neighbourhood. Two churches and dozens of Bibles were also desecrated in the attack.

Defence lawyer Ghulam Murtaza Chaudhry said an anti-terrorism court in Lahore had acquitted 112 people accused of torching and ransacking hundreds of houses.

"They were acquitted by the court because of lack of evidences against them," Murtaza told Reuters. "The state witnesses could not identify the accused and their statements were also contradictory."

All 112 suspects were already out on bail.

A road sweeper in his late twenties, Sawan Masih told police after his arrest on blasphemy charges that the real reason for the blasphemy allegation was a property dispute between him and a friend who spread the rumour.

In Pakistan, conviction under the blasphemy laws can carry a mandatory death sentence.

Masih was sentenced to death in 2014, a decision he has appealed.

Critics of Pakistan's blasphemy laws say they have long been used by individuals and religious groups to settle disputes.

This month, the Pakistani Senate's human rights panel said it would debate how to prevent the country's blasphemy laws being applied unfairly, the first time in decades that any parliamentary body had considered a formal proposal to stop the abuse of the blasphemy laws.

Many conservatives in Pakistan consider even criticising the laws as blasphemy, and in 2011 a Pakistani governor, Salman Taseer, was assassinated by his bodyguard after calling for reform of the laws.

His killer Mumtaz Qadri was hailed as a hero by religious hard-liners. Tens of thousands of supporters attended his funeral after he was executed last year and a shrine was built over his grave soon after his burial.

Hundreds of Pakistanis are on death row for blasphemy convictions.