Nepali hospital staff began the grim task of handing over bodies to grieving families on Tuesday after a plane with 72 people on board crashed, the country's worst aviation disaster in three decades.

The Yeti Airlines flight with 68 passengers and four crew members plummeted into a steep gorge, smashed into pieces and burst into flames as it approached the central city of Pokhara on Sunday.

All those on board, who included six children as well as 15 foreigners, are believed to have died.

Rescuers have been working almost around the clock extracting human remains from the 300-metre deep gorge strewn with twisted plane seats and chunks of fuselage and wing.

Seventy bodies had been retrieved by early Tuesday, police official AK Chhetri told AFP. Another senior official told AFP on Monday the hope of finding anyone alive was "nil".

Drones were being used and the search had been expanded to a radius of two to three kilometres, he said.

Up to 10 bodies were transferred by army truck from Pokhara hospital to the airport ready to be airlifted back to the capital, Kathmandu.

Another three bodies were handed over to grieving families in Pokhara, with others due to follow.

The ATR 72 was flying from Kathmandu to Pokhara, a gateway for religious pilgrims and trekkers, when it crashed.

"I was walking when I heard a loud blast, like a bomb went off," said witness Arun Tamu, 44, who was around 500 metres away and live-streamed video of the blazing wreckage on social media.

The cause was not yet known but a video on social media showed the twin-propeller aircraft banking suddenly and sharply to the left as it neared Pokhara airport. A loud explosion followed. (AFP)