Two feared dead in Sydney plane crash

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Two people are believed to have died in a light plane crash in Sydney's southwest.

Police say at least two people are believed to have been on board the plane, which burst into flames when it crashed and exploded at Canley Vale at 10am (NZT) after striking power poles.

Just one person has been confirmed dead so far.

Superintendent Ray King said the plane had taken off from Bankstown Airport 10 minutes earlier.

The pilot of the plane told the control tower at Bankstown that he was losing altitude, an audio recording played on Fairfax Media shows.

"We're not maintaining height here," the pilot says, identifying the plane by the call sign Papa Golf Whisky (PGW).

"Got any ideas of any good roads or anything?"

An air traffic controller suggests the M7 motorway, then the Warwick Farm racecourse, but the pilot cannot see either of them.

"We've got no height here," he says before contact is lost.

Eyewitnesses said the plane continued to lose altitude quickly and crashed in a suburban area.

The plane had been hired for a "specific purpose" rather than a pleasure flight, Supt King told reporters.

"Miraculously, no houses were damaged or the nearby school," he said.

Seven people, including four adults and three children, were taken to Liverpool Hospital suffering from emotional distress, including the driver of a car narrowly missed by the plane, Supt King said.

Two other adults and three children, who were among 80 people evacuated from Canley Vale Road, were also taken to hospital after witnessing the crash, NSW Ambulance Service Inspector Stephanie Radnich said.

The evacuees, including staff and students from the Canley Vale Public School, were taken to a nearby park.

An elderly woman discovered in a distressed state by paramedics a few streets away was also taken to hospital.

Burning fuel spilled from the crashed plane and ran down Canley Vale Road, setting fire to a parked car.

Kevin Huynh, 33, had a narrow escape when the plane came within metres of his home, knocking down his garden fence and setting his garden on fire.

Mr Huynh ran out of his house and jumped the fence of the adjacent school to escape the flames.

"The whole front of my place was on fire," Mr Huynh told AAP.

"As I jumped the fence, I heard a second big explosion. I was pretty lucky to escape."

The plane came within 10 metres of crashing into his house, Mr Huynh said.

"I'm really hoping the fire didn't damage the house."

Leo Lovito, 30, was woken up by the massive explosion.

"There was black smoke everywhere and a really strong smell of petrol.

"It's very lucky it didn't hit the school," he told AAP.

Local resident Joanne Saunders said she heard three loud explosions and thought a bomb had gone off.

"It frightened the hell out of me. There was smoke everywhere. When I saw it was a plane I couldn't believe it," she told AAP.

Electricity was automatically cut off in the area after the crash brought down power lines.

An Integral Energy spokesman said the emergency cut-out system initially left some 13,500 customers without power.

"There are some 2500 customers still without power," he told AAP.

Most would be reconnected later on Monday but about 100 properties close to the crash site would be without power for longer.

- AAP