Twenty-eight people were killed and four people survived a plane crash in stormy weather in Papua New Guinea's remote forests, according to officials.

Australia's department of foreign affairs and trade said in a statement that one pilot from Australia and another from New Zealand were among the survivors of Thursday's crash.

The airline, Airline PNG, said the victims of the crash were believed to be Papua New Guinea nationals.

The Australian Associated Press news agency reported that most of the passengers were parents travelling to attend their children's university graduation ceremony in the resort of Madang over the weekend.

The Dash 8 aircraft crashed 20 kilometres south of Madang en route from Lae, Sid O'Toole, a spokesman for Papua New Guinea's accident investigation commission.

Airline PNG said the crew had attempted to conduct a controlled emergency landing in bad weather, but the plane broke up and caught fire on impact.

Trevor Hattersley, an Australian official in Madang, said, "The weather was horrendous. There was a huge storm that came through at the same time, big rain, big wind."

Residents of a nearby village rushed to help, pulling people from the wreckage, he said.

The storm had left the lone road from the crash site to Madang flooded, so rescuers had to get the four survivors to the nearest beach and transport them to Madang by boat.

Airline PNG said it has launched a full investigation into the possible cause of the crash and had temporarily grounded its 11 remaining Dash 8 aircraft.

Bill Spencer, the 64-year-old pilot who survived the crash, had 45 years flying experience, including 35 years in Papua New Guinea, the airline spokesperson said.

Source: Agencies