A fire on an overnight train killed at least 23 people Saturday in southern India as it ripped through a carriage packed with sleeping passengers, officials said.

Railways Minister Mallikarjun Kharge told AFP that the blaze was believed to have been caused by a faulty air-conditioning system on one of the coaches which caught fire around 3:30am as it travelled from Bangalore to Nanded.

Television reports said that some of the passengers had leapt out of the carriage in a bid to save themselves but others were overcome by the thick fumes. Two of those who died were children, the reports added.

The tragedy comes little over a year after another train in the same state of Andhra Pradesh killed 32 people and once again shines the spotlight on the Indian rail network's woeful safety record.

"Twenty-three people have died and we have eight injured," Kharge confirmed to AFP, five of whom were being treated in a nearby hospital.

He said that a team of investigators who had been sent to the site of the disaster, around an hour outside the city of Nanded, had reported that the fire was "because of an electrical short circuit".

A more detailed report would be compiled later, he added.

"An inquiry has been instituted under the chairmanship of the railway board," said Kharge.

The local police chief confirmed to AFP that there had been fatalities and that rescue operations were under way but would not give a number of the dead.

Speaking to The Hindu newspaper from the scene of the fire, a local police inspector said that the driver had stopped the train when he saw flames around an hour from its destination.

"The fire is being doused. The bodies will be brought out once the smoke subsides a little," Railway Police Inspector Sai Prassad, who was overseeing the rescue effort, told the newspaper's website.

"We are expecting at least 23 casualties although the exact figure can be given only after the rescue operation is over," he added.

A total of 67 people were travelling in the carriage, said the minister.

The carriage had been completely gutted by the fire and adjacent coaches also bore scorch marks, video footage from the scene showed.

In a statement on his official Twitter account, Prime Minister Manmohan Sigh expressed his "shock and grief at the loss of life in the train accident in Andhra Pradesh".

"PM directs railway and state government authorities to extend all possible help to the victims in rescue and relief operations," the statement added.

The railways ministry has set up a special hotline for families to see if relatives have been caught up in the tragedy and an initial compensation package has been unveiled worth around 500,000 rupees ($8,000) per family.

India's accident-prone rail network is still the main form of long-distance travel in the huge country despite fierce competition from private airlines.

Thirty-two people were also killed in Andhra Pradesh in July last year on an express train carrying sleeping passengers to the southern city of Chennai.

India's worst rail accident was in 1981 when a train plunged into a river in the eastern state of Bihar, killing an estimated 800 people.