The driver of the modified Peugeot 208 that hit the spectators and her 51-year-old woman co-driver were taken to hospital but their lives were not in danger, prosecutors said.

The accident occurred near the town of Ambert in central France around 11 am (0900 GMT) on Saturday.

Two men died at the scene and prosecutors later announced that a third man, airlifted to hospital, succumbed to his injuries.

The three killed were two brothers, aged 70 and 60, and a 44-year-old man, according to the public prosecutor's office, which opened an investigation into involuntary manslaughter.

Several people who witnessed the accident, were in shock, and nine people were taken to a psychological support unit set up in the nearby village of Saint-Just.

"This is a tragedy for the world of racing," Joel Mathurin, the top government official for the department of Puy-de-Dome, told reporters at the scene.

The road at the accident site is flanked by cornfields.

Several hours after the crash, pieces of plastic and glass fragments were visible near the scene, according to an AFP journalist.

Regional prosecutor Laure Moisset said the impact was "very violent."

"Today, we have three families mourning the loss of loved ones in this accident," she said.

When asked about the possibility that the victims were in an area closed to the public, Moisset said she preferred to "be cautious."

"It is still a little too early to be precise," she added.

"The race was extremely well organised," she added.

Initially, the prefect had said that the spectators hit by the car were in a restricted area marked off by red tape.

The areas reserved for the public are marked with green tape.

- 'Violent crash' -

Organised since 1965, the motor rally attracted 167 teams for its 32nd edition.

In the rally held last year, a race marshal died.

In a short statement after the accident on Saturday, the rally organisers said that the race was halted at 10:49 am.

All spectators were asked to leave the scene and the event's award ceremony was cancelled.

Dozens of firefighters and police were dispatched to the scene.

The investigation was "in its early stages," the prosecutor said.

The Peugeot 208 car was to be examined.

The road where the accident took place, almost a straight line according to the authorities, has been closed.

The mayor of Saint-Just, Francois Chautard, said the rally passed through his village in recent years.

He said he had seen the "dented" car when it was being towed away.

"I think the crash was violent," he said.