At least 36 people died in a fiery collision between a methanol tanker and a double-decker sleeper bus on Sunday in China's worst traffic accident in more than a year.

Both vehicles caught fire and only three of the 39 people onboard the bus survived the motorway crash, which occurred around 2:00 am, Xinhua news agency reported.

A total of 36 bodies were pulled from the debris and three people were taken to hospital.

The accident was the worst in China since a fire on an overcrowded sleeper bus carrying flammable materials killed 41 passengers in central China in July last year, according to the country's work safety watchdog.

Details of Sunday's crash -- which happened 200 metres (yards) from a motorway service station at Yanan city in northern Shaanxi province -- were still unclear.

Yue Jiuxiang, a local traffic police official in charge of the rescue operation, said most of the passengers were asleep at the time of the crash.

"Soon after the collision, the bus was engulfed by flames," he told state-broadcaster China Central Television.

"The front part of the bus was seriously damaged. Also most of the passengers were sleeping. This is why so many people died."

Yue said the bus was en route from Baotou in Inner Mongolia to the Shaanxi provincial capital Xian when the collision occurred.

Police were investigating the cause of the accident which happened on the Baotou-Maoming Expressway, which spans the length of China from the northern city of Baotou to the southern province of Guangdong.

An official at Yanan city government information department surnamed Liu told AFP: "The confirmed death toll is now 36. I don't have any further details."

China's roads are highly dangerous, with traffic laws and safety widely flouted, and truck drivers typically overworked.

Last year more than 62,000 people died in traffic accidents, state media said, citing police figures.

Vehicles carrying explosive materials -- which must first get permission from the police before travelling on the roads in China -- are involved in many accidents.

At least 20 people were killed in June near the southern city of Guangzhou when two trucks collided, triggering an explosion that set a timber mill under the expressway bridge ablaze.

Buses are also commonly involved in road accidents as operators often seek to cram as many people as they can into their vehicles to maximise profits and drivers hurtle down highways.

The July 2011 accident involved a double-decker which was reportedly only designed to carry 35 passengers but had 47 people on board.

It was taking people to southern Hunan province when it caught fire in the early morning.

Twenty-three people were killed and three injured in April when a bus and truck collided in the eastern province of Anhui.

Another collision between a tour bus and a truck the same month left 13 dead and 21 injured.