Dozens of people are feared dead after a packed train derailed inside a tunnel in eastern Taiwan on Friday at the start of a long holiday weekend, with rescuers still scrambling to reach others trapped inside.

President Tsai Ing-wen's office said she had ordered hospitals to prepare for a mass casualty event.

"The top priority now is to rescue the stranded people," it said in a statement.

The accident occurred on Taiwan's eastern railway line around 9:30 am (0130 GMT) near the coastal city of Hualien.

Pictures published by local news website UDN showed the front of the train inside the tunnel had been pulverised into a twisted mesh of metal.

Railway police said 36 passengers were classified as "out of hospital cardiac arrest" -- a term for someone showing no signs of life.

A further 72 people were still believed to be trapped inside train carriages while 61 passengers had been sent to hospital.

The Central Emergency Operation Center gave a slightly lower suspected death toll of 26 people showing "no signs of life".

Another live broadcast by UDN outside the tunnel showed at least two undamaged train carriages with rescuers helping passengers escape.

"It felt like there was a sudden violent jolt and I found myself falling to the floor," an unidentified female survivor told the network.

"We broke the window to climb to the roof of the train to get out."

- Construction vehicle -

The eight-car train was making its way from Taipei to the southeastern city of Taitung and was carrying some 350 passengers.

Local media said the accident was believed to have been caused by a construction vehicle sliding down an embankment and striking the train as it passed into the tunnel.

Pictures from the scene showed the back of a yellow flatbed truck on its side next to the train.

The accident occurred at the start of the busy annual Tomb Sweeping Festival, a long holiday weekend when Taiwan's roads and railways are usually packed.

During the festival, people return to ancestral villages to tidy up the tombs of their relatives and make offerings.

Taiwan's eastern railway line is usually a popular tourist draw down its dramatic and less populated eastern coastline. 

With the help of multiple tunnels and bridges, it winds its way through towering mountains and dramatic gorges before making its way down Huadong Valley.

Friday's crash looks set to be one of Taiwan's worst railway accidents in recent decades.

The last major train derailment in Taiwan was in 2018 and left 18 people dead at the southern end of the same line.

The driver of the eight-carriage train was later charged with negligent homicide. More than 200 of the 366 people on board were also injured.

That crash was the island's worst since 1991, when 30 passengers were killed and 112 injured after two trains collided in Miaoli.

Thirty were also killed in 1981 after a truck collided with a passenger train at a level crossing and sent coaches over a bridge in Hsinchu.

And in 2003, 17 died and 156 were injured after a train on the Alishan mountain railway plunged into a chasm at the side of the track.