Three Americans have died after a Rural Fire Service air tanker crashed while fighting fires in New South Wales.

"Our thoughts and prayers and heartfelt condolences go to their families," New South Wales Premier Gladys Berejiklian said, confirming the deaths.

"It was a company contracted by the RFS to undertake that vital work and, again, our deepest condolences to those families who have been impacted.

"It demonstrates the dangerous work currently being undertaken and it also demonstrates the conditions that our firefighters are working under."

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The large C-130 aircraft is understood to have crashed around 1.45pm near Peak View while conducting water bombing on large fires in the area.

RFS Commissioner Shane Fitzsimmons said it appears no one on board the aircraft survived the crash.

"Tragically, there appears to be no survivors as a result of the crash down in the Snowy Monaro area.

"It's impacted heavily with the ground and initial reports are that there was a large fireball associated with the impact of the plane as it hit the ground.

"We've got a number of firefighters and a number of crew that are in the area and working to contain and work around the fire.

"It is still an active fire ground. It did take some time with the use of ground crews and a number of aerial surveillance platforms to try to locate the wreckage."

Other large air tankers have been grounded this afternoon as a precaution while crews review the aircrafts to ensure there are no "systematic" issues.

Commissioner Fitzsimmons said at this stage it is not known what caused the crash.

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