TWENTY people have been killed by a fire on a bus on a German motorway started by a passenger smoking in the toilet.

In Germany’s deadliest such incident in 16 years, the coach burst into flames at 8.40pm (6.40am AEDT) 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 about 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 the fire was caused by one of the passengers smoking in the bus toilet and didn’t put his cigarette out properly.

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 on fire 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.”

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.