A Colombian bus driver was allegedly seen meddling with a petrol hose moments before the vehicle caught fire, killing dozens of children, local officials have said.

Causes of the disaster in the in the city of Fundacion, about 750km (465 miles) north of Bogota, were not immediately clear but local media speculated the bus might have been used for smuggling petrol.

"Some children who survived said the driver was manipulating a gasoline hose," Fundacion Mayor Luz Stella Duran told El Mundo newspaper.

Among the 50 passengers on board the overcrowded bus were 43 children aged between 2 and 14 as it went up in flames. They were returning from an event at an evangelical Christian church. The bus had a capacity for only 38 passengers and no emergency exits.

Local media said petrol smuggling is common in the area and public transport buses are often fitted with hidden tanks.

In 2007, a passenger bus travelling between the city of Santa Marta in the department of Magdalena and Riohacha, in La Guajira, exploded killing 27 people, as its illicit cargo caught fire.

Other reports suggested that a fire accidentally started as the driver attempted to manually switch the rudimental hybrid engine from gas to petrol, or to restart the run-down vehicle by pouring gasoline into the engine from the cabin floor.

"There was a canister of gasoline inside the vehicle. The fire spread very fast," Eduardo Velez, coordinator of emergency response corps, told Reuters.

Col. Adan Leon, the regional police chief, said 18 people, including some adults, had been found alive at the scene and an investigation was underway.

The driver managed to escape unscathed and was being questioned by police.