Pakistan has launched an investigation after a passenger jet crashed and burst into flames while attempting to land during a thunderstorm, killing all 127 people on board.

The Bhoja Air flight from Karachi came down in fields near a village on the outskirts of capital Islamabad on Friday evening -- the city's second major fatal air crash in less than two years.

The airline said the Boeing 737 was carrying 121 passengers, including 11 children, as well as six crew.

Civil aviation official Junaid Khan told AFP: "All 127 people died. No one survived. There was no possibility of any survivor in this crash."

Doctor Waseem Khawaja, who is in charge of Islamabad's main hospital, the Pakistan Institute of Medical Sciences, said bodies had been brought in more than 100 bags. "There was no survivor, all on board are dead," he told AFP.

Waseem said that despite the fire, most of the bodies were not charred and 73 had been identified already.

Debris from the crash was scattered over a two-kilometre (one-mile) radius, said Brigadier Sarfraz Ali, who is heading recovery efforts.

A team of senior civil aviation officials have begun an investigation into the crash, which came less than two years after the worst ever air disaster on Pakistani soil.

In July 2010 an Airbus A321 operated by the private airline Airblue crashed into the hills overlooking Islamabad while coming in to land in heavy rain and poor visibility, killing all 152 people on board.

Torn fragments of the fuselage, including a large section bearing the Bhoja Air logo, littered the fields around the village of Hussain Abad after Friday's crash.

Rescue workers in orange jumpsuits and local residents used torches to search through the wreckage after nightfall, assisted by soldiers carrying assault rifles.

The smell of burning filled the air at the scene and human limbs were scattered in a large area spattered with blood, witnesses said.

An AFP reporter saw an orange flight data recorder in a house where some of the wreckage fell.

Pakistan Navy official Captain Arshad Mahmood said the crash happened as the plane approached the runway to land.

"The weather was very bad, there was hail and a thunderstorm. The pilot lost control and hit the ground. It tossed up due to the impact and exploded and came down in a fireball," he said.

An airport source said the plane had been due to land at Islamabad airport at 6:50 pm (1350 GMT) but lost contact with the control tower at 6:40 pm and crashed shortly afterwards.

Distraught relatives gathered at the airports in Islamabad and Karachi, searching for the names of loved ones on the passenger list for the ill-fated flight.

A special flight carrying relatives from Karachi to Islamabad was due to arrive on Saturday morning.

Nadeem Khan Yusufzai, director general of Pakistan's Civil Aviation Authority, said initial reports suggested bad weather was to blame for the crash.

Bhoja Air relaunched domestic operations with a fleet of five 737s in March, according to newspaper reports, when the airline was planning to start flights connecting Karachi, Sukkur, Multan, Lahore and Islamabad.

Bhoja had been grounded in 2000 by civil aviation authorities amid financial difficulties, the reports said.

The deadliest civilian plane crash involving a Pakistani jet came in 1992 when a PIA Airbus A300 crashed into a cloud-covered hillside on its approach to the Nepalese capital Kathmandu, killing 167 people.