Dozens of people are feared to have been killed and around 100 others injured after a fire tore through a crowded bar during a New Year's Eve party in the luxury Swiss ski resort town of Crans-Montana, local authorities have said.

The Italian foreign ministry said information from Swiss police indicated about 40 deaths, but police would not be more specific than "tens" at a press conference on the incident.

Stephane Ganzer, head of security for the Valais canton (region), said some of the victims are from other countries, but their nationalities are yet to be confirmed.

Rescuers at the site of an explosion at a bar in Crans-Montana, Switzerland. (Maxime Schmid/AFP)

The majority of the injured are seriously hurt and Valais Hospital's Intensive Care Unit is full, with patients being transferred elsewhere, local authorities said.

The "fire of undetermined origin" began at 1:30am, local time, on Thursday in a bar called Le Constellation in south-western Switzerland as revellers rang in the New Year, according to police.

The bar has a capacity of 300 people and another 40 people on its terrace, according to the Crans-Montana website.

The spokesperson said some 100 people had gathered there for New Year's Eve celebrations.

A tourist from New York filmed bright orange flames pouring from the bar, and told AFP he saw people running and screaming in the dark.

Police said a large contingent of emergency services was mobilised, including 10 helicopters and 40 ambulances.

The area has been completely closed off, and a no-fly zone has been imposed over Crans-Montana, police said.

Swiss media suggested that the fire may have started when pyrotechnics were used during a concert, but police said the cause was unknown.

While the investigation is ongoing, authorities have stressed that the incident is being treated as a fire and not an attack.

Police spokesperson Gaetan Lathion told AFP earlier there had first been an "explosion of unknown origin".

Italy's ambassador to Switzerland, Gian Lorenzo Cornado, told Sky TG24 that local authorities informed him the blaze was caused by someone setting off a firework inside the bar, which set fire to the ceiling. 

Two French women who said they were in the bar told France's BFM TV that they saw the fire start in the basement section of the club after a bottle containing "birthday candles" was held up too close to the wooden ceiling.

Swiss Federal President Guy Parmelin expressed shock at the scale of the disaster.

Prosecutor Pilloud said authorities were trying to get the bodies of the victims to their families.

"A lot of resources have been put into forensics to identify the victims. These resources are intended to allow us to get the bodies to the families as soon as possible," she said.

Reuters/AFP