The death toll from the crash of an Indonesian air force plane packed with military personnel and their families rose to 142 on Wednesday, as witnesses described people fleeing from the disaster zone covered in blood with their clothes alight.

The Hercules C-130 transport plane crashed into a residential area of Medan on Tuesday, shortly after taking off from an air base in the city on Sumatra island.

Buildings were severely damaged, cars reduced to flaming wrecks and the plane itself was almost completely destroyed, with the mangled tail the only part of the 51-year-old aircraft still recognizable after the accident.

Many of those on board the flight to an island off Sumatra, which was carrying 122 people, were believed to be military personnel and their families.

The air force has repeatedly revised upward the number of people on the plane - it initially indicated there were only 12 crew members - raising questions about poor management and whether there were paying civilians on board in violation of military rules.

As more bodies were pulled from the rubble and taken to hospitals, police put the total death toll at 142, indicating a growing number of fatalities in the neighborhood where the plane crashed.

New witness accounts emerged of terrifying scenes, with one man describing how the plane flew low and then smashed into a building, producing "flames as high as four stories".

"Everyone panicked and screamed," said Tumpak Naibaho, a 27-year-old tire repairman, adding there were hundreds of people in the area when the crash happened around midday.

"I thought it was a terrorist attack or something. ... I saw one man whose clothes were on fire, staggering out of the debris. His face was covered in blood, dust and ash.

"I had never felt so scared in my life, I thought I was going to die."

Buildings destroyed

People in the area said several buildings were thought to have been destroyed in the crash, with officials saying that the plane hit a massage parlor and a hotel.

Rescuers were continuing on Wednesday to clear debris, which was spread over a large area, helped by two earthmovers, as hundreds looked on.

One end of a three-story building had been left in ruins, with the walls blown away, leaving only the soot-blackened interior visible. An overturned, wrecked car could also be seen among the debris.

An army officer involved in the recovery effort said many bodies were found in pieces.

Claims emerged that civilian passengers other than armed forces' families may have been on the plane to Bintan Island, close to Singapore, and had paid to travel, with the Jakarta Globe reporting that the military was investigating the allegations.

AFP - AP