UPDATED 6.02PM A group of schoolchildren made a lucky escape before their school bus was completely gutted by fire in Nelson this afternoon.

Firefighters were called to the vehicle fire on Paton Rd, Richmond, at 3.30pm.

Fire Service spokesman Brent Dunn said the bus was "well ablaze" but all passengers were accounted for, and no injuries were reported.

About 27 students had been on the bus when it caught fire, although when fire crews arrived they were gathered at the top of the hill with the bus driver.

The first firefighters on the scene called in more tankers to put out the fire due to limited water in the area.

Eight firefighters wore breathing apparatus while they extinguished the fire, which took about 15 minutes to get under control. With the bus destroyed, their main aim was to stop the spread of fire to vegetation close by.

The bus was under power lines, leading to an isolated power cut.

It was unclear what caused the fire, but a large amount of oil on the road suggested a possible mechanical failure as the bus made its way over the Switch Backs.

Paton Rd was closed from the roundabout where it meets Wensley Rd, to just past the incident site as fire trucks blocked the road.