Hanover, Germany - As investigators continued the slow work of identifying 20 dead from Germany's worst bus disaster in 15 years, police said Wednesday the fire began in the toilet of the bus.

Passengers said they saw smoke come from the closed toilet, and when the door opened, flames roared out and spread through the moving vehicle's interior Tuesday evening.

There was speculation a passenger may have surreptitiously smoked in the toilet. In Germany it is illegal to smoke on public transport. Police said the bus had no technical defects.

"The tyres and the engine are intact," police spokesman Stefan Wittke said.

The bus had nearly arrived home in the northern city of Hanover after a day's outing by a group of elderly people.

As the bus halted on an autobahn, 12 passengers aged 45 to 80 and the driver scrambled out, but a majority of the passengers, many of them lame, were caught inside and killed.

Rescuers recovered Zimmer frames, used by elderly people as wheeled supports to walk, from the wreckage.

"The bodies are still in the wreckage and have not been identified yet," a police spokesman said at dawn, before investigators arrived at daylight to remove the remains and document the wreckage.

Investigators are to study how the fire could have spread so quickly, spokesman Uwe Hollstein added.

German Transport Minister Wolfgang Tiefensee said Berlin would study if safety regulations were strict enough.

"If it turns out to be true that only a few of the passengers were able to escape the flames and get out of the bus, then an examination is needed to determine whether safety standards were adhered to and whether they need to be improved."

Germany's worst bus disaster in recent decades was in September 1992 when 21 were killed in a Black Forest crash. (dpa)