Twenty people have been killed by a fire on board a bus on a German motorway set off by a passenger smoking in the toilet, police said on Wednesday.

In Germany's deadliest such incident in 16 years, the coach burst into flames at 8:40 pm (1940 GMT) on Tuesday on a motorway just outside the northern city of Hanover.

The driver quickly pulled over, but in the panic to escape the inferno rapidly engulfing the bus only around a third of the mostly elderly passengers managed to get out. Twelve people were injured, police said, several of whom were being treated for serious burns in a nearby hospital.

Police said that it was not the result of a crash with another vehicle but that it had been caused by one of the passengers smoking in the bus toilet who failed to extinguish properly his cigarette.

When smoke began pouring out of the toilet door another passenger opened it and flames shot out, setting the entire interior of the Mercedes coach in flames in seconds.

The local Hannoversche Allgemeine newspaper cited some of the 150 or so rescue workers as saying the fire was the worst they had ever seen and that some of the bodies were so badly charred they could not be identified.

It also cited police as saying that only those sitting in aisle seats were able to escape and that the positions of many of the bodies indicated they were trying to get out when they were overcome by smoke.

Television channel N24 cited a witness as saying that several walking frames had been recovered from the burnt-out vehicle.

The bus, operated by a Hanover firm, was said to be returning home from a day trip to the picturesque small town of Haltern am See in the state of North Rhine-Westphalia.

"I am deeply shaken by the dreadful fate of the victims of the fire," Transport Minister Wolfgang Tiefensee said. "My sympathies go out to their loved ones."

He added that there had to be a "close" examination into what caused the accident.

If initial reports were correct that only a few passengers were able to escape the bus it would have to be investigated whether safety guidelines were adhered to and whether regulations should be strengthened, he said.

It was Germany's worst coach accident for 16 years. In 1992, 21 people were killed and 35 injured in a crash in the Black Forest region of southwestern Germany.

In June 2007, 13 people were killed when a truck ploughed into a coach at full speed, sending it hurtling down an embankment before it landed on its roof off a motorway outside the central city of Halle.