A hot air balloon flying over Egypt's ancient city of Luxor caught fire and crashed into a sugar cane field on Tuesday, killing 19 foreign tourists, heath officials said.

Initial reports said 18 foreigners were killed, but the toll rose after tour operator Thomas Cook confirmed a British tourist had died in hospital.

Another British tourist and the balloon's Egyptian pilot are the only survivors. State radio reported the Egyptian has severe burns on his body.

Rescue workers prepare to remove a body from the scene of the crash.Rescue workers prepare to remove a body from the scene of the crash. (Hagag Salama/Associated Press)

It was one of the worst accidents involving tourists in Egypt and could push the key country's tourism industry deeper into recession.

The casualties included French, British, Belgian, Hungarian and Japanese nationals, as well as nine tourists from Hong Kong, Luxor Governor Ezzat Saad told reporters.

Three survivors of the crash — two British tourists and one Egyptian — were taken to a local hospital. Tour operator Thomas Cook confirmed that two British nationals were among the dead.

"I heard a loud explosion and saw smoke," photographer Christopher Michel said on Twitter. Michel was on a similar balloon tour in the Luxor area, and posted photos from takeoff and his flight.

According to the Egyptian security official, the balloon carrying at least 20 tourists was flying over Luxor on an early morning excursion when it caught fire and plunged at least 300 metres from the sky.

It crashed into a sugar cane field outside al-Dhabaa village just west of Luxor, 510 kilometres south of Cairo, said the official, speaking on condition of anonymity because he was not authorized to talk to the media.

"The representative of the companies that offer these rides said he believed there was a gas explosion on board, which led to the collapse and crash of the balloon," CBC's Nahlah Ayed said.

An official with the state prosecutor's office said initial findings show that the accident occurred when the pilot's landing cable was caught around a helium tube. He spoke anonymously because the investigation is ongoing.

Bodies of the dead tourists were scattered across the field around the remnants of the balloon. An Associated Press reporter at the crash site counted eight bodies as they were put into body bags and taken away. The security official said all 18 bodies have been recovered.

A spokeswoman for Canada's Department of Foreign Affairs said the Canadian embassy in Cairo has confirmed with local authorities that no Canadians were affected by the Luxor balloon crash.

"Our thoughts are with the families and friends of those involved in a hot air balloon crash in Egypt," DFAIT spokeswoman Amanda Reid said in an emailed statement.

Initial death toll revised

The security official said foul play has been ruled out. He also said initial reports of 19 dead were revised to 18 as confusion is common in the aftermath of such accidents.

Christopher Michel, a photographer, took photos of the launch site in Luxor before the crash. Christopher Michel, a photographer, took photos of the launch site in Luxor before the crash. (Photo courtesy of Christopher Michel)

In Hong Kong, a travel agency said nine of the tourists that were aboard the balloon were natives of the semiautonomous Chinese city. It did not say whether all nine were killed. The information was posted on the agency's website.

The head of Japan Travel Bureau's Egypt branch, Atsushi Imaeda, confirmed that four Japanese died in the crash. He said two were a couple in their 60s from Tokyo. Details on the other two were not immediately available.

In Paris, a diplomatic official said French tourists were among those involved in the accident, but would give no details on how many, or whether French citizens were among those killed.

Speaking on condition of anonymity because he wasn't authorized to be publicly named according to government policy, the official said French authorities were working with their Egyptian counterparts to clarify what happened. French media reports said two French tourists were among the dead but the official wouldn't confirm that.

Luxor, Egypt

Officials grounded all hot air balloon flights around the ancient sites indefinitely after the crash.

Hot air ballooning, usually at sunrise over the famed Karnak and Luxor temples as well as the Valley of the Kings, is a popular pastime for tourists visiting Luxor.

The site of the accident has seen past crashes. In 2009, 16 tourists were injured when their balloon struck a cellphone transmission tower. A year earlier, seven tourists were injured in a similar crash.

Egypt's tourism industry has been decimated since the 18-day uprising in 2011 against autocrat leader Hosni Mubarak and the political turmoil that followed and continues to this day.

Luxor's hotels are currently about 25 per cent full in what is supposed to be the peak of the winter season.