• Video report by Senior International Correspondent John Irvine

A Pakistan passenger plane with 98 people onboard has crashed into a crowded residential area near Karachi after suffering what appeared to be an engine failure during landing.

At least five houses were destroyed in the crash of the domestic flight operated by Pakistan International Airlines, the city's mayor said.

The pilot of Pakistani International Airlines Flight 8303 was heard transmitting a mayday to the tower shortly before the crash of the Airbus A320, which was flying from Lahore to Karachi.

The aircraft was carrying 91 passengers and even crew members. Initially, authorities at Lahore airport said 107 were on board, a mistake attributed the discrepancy to confusion in the aftermath of the crash by Pakistan’s civil aviation.

Mayor Wasim Akhtar said all those on board died, but was later contradicted by two civil aviation officials who said that at least two people survived the crash.

Rescuers were seen pulling bodies and injured people from the burning wreckage as police and emergency services pushed their way through the narrow streets of the crowded neighbourhood near the airport.

In video seen by ITV News, parts of the plane were scattered on the ground.

The crash scene in the Model Colony area. Credit: PA

The pilot issued a mayday warning in their final exchange with air traffic control, posted on the website LiveATC.net.

The message indicated they had failed to land and was circling around to make another attempt.

“We are proceeding direct, sir — we have lost engine,” a pilot said.

“Confirm your attempt on belly,” the air traffic controller said, offering a runway.

“Sir - mayday, mayday, mayday, mayday Pakistan 8303,” the pilot said before the transmission ended.

Rescuers pull an injured person from the wreckage. Credit: AP

Witnesses said the Airbus A320 appeared to attempt to land two or three times before crashing in a residential area near Jinnah International Airport.

Local television reports showed smoke coming from the direction of the airport as ambulances and fire engines making their way through the crowds congregating on the streets.

The residential area on the edge of the airport known as Model Colony is a poor area and heavily congested.

The plane crashed into a residential area in the city. Credit: AP

Abdul Rahman who lives in the area said he saw the aircraft circle at least three times, appearing to try to land at the airport before it crashed into several houses.

Prime minister Imran Khan tweeted: “Shocked & saddened by the PIA crash. . . Immediate inquiry will be instituted. Prayers & condolences go to families of the deceased.”

Airbus did not immediately respond to a request for comment on the crash.

Airworthiness documents showed the plane last received a government check on November 1.

PIA’s chief engineer signed a separate certificate on April 28 saying all maintenance had been conducted on the plane and it was “fully airworthy and meets all the safety” standards.