Officials suggested the flight had been diverted due to bad weather, but it was unclear why the jet was flying so low and close to the hills, which are well away from the normal route for aircraft arriving from Karachi.
The plane, an Airbus 321, had been on a domestic flight from the southern city of Karachi.
Such was the force of the crash that the plane was said to have virtually disintegrated with few of the bodies of the victims recovered intact.
|Rescue workers said few bodies found at the scene were intact [AFP]
Health officials said DNA tests would be the only way to identify many of the remains.
Rescue worker Arshad Javed told the AFP news agency of horrifying scenes at the crash site.
"All we could see were charred hands or feet. I collected two heads, two legs and two hands in a bag.
"We shouted if anyone was there alive, but heard no voice," he said.
In a statement, Yousuf Raza Gilani, Pakistan's prime minister, "expressed grief and sorrow over the tragic incident" and offered prayers for passengers who were killed.
"The federal cabinet declared one day national mourning because of this tragic incident. The prime minister called off the cabinet meeting until next week in the wake of this tragic incident," Gilani's office said in the statement.
Qamar Zaman Kaira, the information minister, announced compensation of $5,800 for families of the victims.
Pakistan-based Airblue started operations in 2004 and is flying to many cities in Pakistan as well as five destinations in the Middle East and the UK.
European aircraft-maker Airbus said the single-aisle plane was a relatively young 10 years old, adding that it would offer its full assistance to Pakistani investigators.