Greater Hyderabad Mayor B. Rammohan said two bodies were pulled out from the debris in Nanakramguda.
Rescue workers rescued a woman and a child while clearing of debris continued to find other missing labourers and their family members.
The rescue operation continued through the night but gathered pace on Friday morning.
National Disaster Response Force (NDRF) teams along with police and fire fighting personnel were participating in the rescue work.
The labourers from Vijayanagaram district in Andhra Pradesh and Chhattisgarh were asleep when the building collapsed.
Deputy Chief Minister Mohammed Mahmood Ali and Home Minister N. Narasimha Reddy were supervising the rescue and relief work.
Chief Minister K. Chandrasekhar Rao, who was in Delhi, directed the officials to speed up the rescue operation.
Rammohan said the builder did not have necessary permissions to construct the building.
Greater Hyderabad Municipal Corporation (GHMC) officials said the G+6 storied building was being constructed in violation of all norms.
The building had come up on just 270 square yards. Officials said the builder was also constructing a pent house.