Part of the plane can be seen in the lake.
A witness to today's plane crash on Lake Taupo said he saw the plane lose altitude and then "there was just a big splash."
Michael Kelly, 49, was out on the lake fishing when he heard a noise and saw the plane hit the water nearby, about 200 metres from the shore.
Mr Kelly, a grocer from Wellington who is holidaying at Rainbow Point, Taupo, said he headed to the crash site, about a kilometre away.
When he arrived on the scene, there were already two other boats that had collected some of the parachutists.
A police boat arrived about 10 minutes later, followed by other emergency services and a helicopter.
For about an hour, Mr Kelly helped collect debris that was floating in the area, along with an oil slick.
Mr Kelly said the crash had been a shock but he was just happy nobody appeared to be seriously hurt or killed: "I don't want to go parachuting, that's for sure".
Police say it can now be confirmed that the plane which crashed this afternoon in Lake Taupo was a skydiving plane from Skydive Taupo.
The aircraft encountered an emergency situation during the climb to altitude and as a result all of those on board, including the pilot, exited the aircraft by parachute.
There were 13 people on board made up of the pilot, six crew and six passengers.
The six crew were due to tandem skydive with the six passengers and they evacuated the aircraft in tandem.
All 13 landed safely on the shore and were checked over by ambulance staff.
Victim Support has been notified and Skydive Taupo is also providing support to all of those involved.
The Transport Accident Investigation Commission (TAIC) has opened an inquiry into the incident, saying the pilot, six tandem masters and their passengers evacuated after a reported engine problem.
"Three investigators are travelling to Taupo to commence inquiries that will focus at first on securing evidence including the wreckage, aircraft and flight information, and gathering initial accounts from those involved as well as witnesses," the TAIC said.
"A fourth investigator is working from Wellington. Police divers will assist the commission's investigators with underwater inspection and photography of the wreckage before it is lifted from the lake bed by commercial salvage experts.
"The inquiry would focus on identifying what occurred and why, the TAIC said, as well as any lessons or recommendations which could be taken from the crash to prevent similar incidents in the future.
A full inquiry could take up to 18 months, it said.
Skydive Taupo has confirmed the plane that crashed was operated by the company.
Chief executive Roy Clements said in a statement that the plane encountered an engine problem shortly after take-off.
Nearby resident Jan Neville said although she did not witness the crash, she saw the tail of the aircraft jutting out of the water and recreational boaties responding to the rescue effort.
"I arrived there after it had all [happened]. All I saw was the boats around a tiny piece of the plane out of the water and then all the emergency vehicles coming.
"You could see something light just sticking out of the water, but that was about all that I could see."
Taupo Mayor David Trewavas said the pilot of the skydiving plane lost power about 1300 metres off the ground and realised those aboard needed to bail out.
He said at the point the plane left the ground it was carrying about a dozen passengers and the pilot.
"All the precautions were taken and they evacuated the plane safely. The plane then crashed into the lake at a place called Loafer's Paradise," he said, referring to the southern end of Rotongaio Bay near Waitahanui.
Mr Trewavas said Taupo hosted the highest number of parachute jumps in the southern hemisphere and was a "very large tourism activity" in the area carried out by "very experienced operators".
Mr Trewavas said he met the management of Skydive Taupo this afternoon.
"They were about to have debrief, everyone was coming back to the base ... and obviously comforting all the participants.
"Everyone is okay, that's the main thing. A bit shaken. We are just offering the operator support, I think there was a mix of international and domestic participants, so what we are saying is that anything we can do to help, we will.
"The pilot of the plane landed in a blackberry bush, Mr Trewavas said.
He and others on board should be praised for the way they handled the situation.
"There is nothing much you can do about an engine malfunction. Things kicked in to gear and everyone was evacuated safely."
And it just shows the experience of the operators and how well-equipped they were."
- with NZME
Earlier story: Thirteen people on board a light aircraft which crashed into Lake Taupo this afternoon have "miraculously" escaped serious injury.
A St John spokesman said two ambulances and a rescue helicopter were at the scene at Rotongaio Bay, near Waitahanui.
He said 12 people from the plane were being assessed but there were no major injuries reported at this stage.
The Rotorua Daily Post understands everyone on the skydiving plane parachuted out, including the pilot.
It is understood the plane is at the bottom of the lake.
Civil Aviation Authority spokesman Mike Richards said it was miraculous no one was killed.
Mr Richards said more details would be released later as it was still "really, really early days" but a safety investigation team was already reviewing the incident.
A NZME. reporter at the scene said skydivers bailed out of a stalled skydiving plane about 400 metres above Lake Taupo in the seconds left before it plunged nose-first into the water this morning.
A witness, who didn't want to be named, said the skydiving plane "conked out" off Waitahanui, before going into Rotongaio Bay.
"It was just 'putt' and stop. Then it cruised for about 100 metres. Then half a dozen parachutists jumped out."
The witness said the accident happened in full view of dozens of holiday makers, who raced to the shoreline to watch.
Those who had boats got them into the lake and set out to help the pilot and escaped parachutists.
Police spokeswoman Kim Perks said emergency services were notified after midday.
"Reports came in at 12.25pm of a plane crashing into the lake.
She said it was too early to say what went wrong.
A witness believed the plane was in its initial climb from Taupo airport, a popular base for a cluster of skydiving companies.
Taupo's Greenlea Rescue Helicopter was at the scene but was not required.
Donovan Duff was already serving a life sentence. He was handed another one today.