At least 28 people have been killed after their bus crashed into a residential building in Iran, the state broadcaster has reported.

The bus, which was carrying Muslim pilgrims headed for holy sites in neighbouring Iraq, crashed in the town of Chavar in the western province of Ilam on Monday, the ISNA news agency said.

"Twenty-eight people were killed in this accident and nine were seriously injured," a hospital director for Ilam was quoted as saying.

"The investigation shows the accident was caused when the driver lost control of the vehicle due to high speed," Mohammad Rooyanian, Iran traffic police chief, told ISNA.

The bus was travelling at over 130 kilometres an hour at the time of the crash, Rooyanian said.

Over 23,000 people have died in road accidents across Iran over the past year to March and many roads in the country are in a poor state of repair.

Thousands of Shia Muslim Iranians visit holy sites in Iraq every year.