"Our teams have now reached the site and I can confirm that there are no survivors," Bimlesh Lal Karna, the head of rescue operations with the civil aviation authority, said
"The scene is quite horrific. We are having to battle against hostile terrain and bad weather to recover the remains of the victims. We will bring them back to Kathmandu as soon as the weather permits," he added.
Local villagers said they saw the plane crash into the field next to a school and break up on impact. The cause of the crash was not immediately clear.
"There are small pieces of the plane all over the field and you can see body parts. We are all so shocked," villager Pratap Lama told the Kantipur radio station.
Relatives of some of the passengers gathered at the airport in Kathmandu to wait for news.
"My cousin is a trekking guide and he was flying up to take a group of tourists to Everest base camp," Ganesh Rijal, 40, told the AFP news agency.
"He got married recently and his wife is in deep shock. I have been waiting here for hours, but nobody has been able to tell me anything."
Al Jazeera's Subina Shrestha, reporting from Kathmandu, said that the region is prone to air crashes because of bad weather and that there is about one air crash in the area annually.
The last major accident was in 2008 when a Twin Otter plane carrying 18 people crashed killing everyone on board.
Thousands of travellers fly into Lukla, 140 kilometres every year to access the Himalayan range that forms Nepal's northern border with Chinese-controlled Tibet.
Tourism is a major foreign currency earner for impoverished Nepal and the number of visitors has increased since a civil war between Maoist guerrillas and the state ended in 2006.