The Twin-Otter turboprop aircraft operated by Tara Air had gone missing eight minutes after it took off from the airport in the resort town of Pokhara on way to Jomsom, the starting point for people trekking the Himalayas which is also popular among Hindu pilgrims visiting the Muktinath temple.
Only small planes can fly the difficult route, which goes between mountains, and is notoriously windy.
All 23 people aboard the N9-AHH aircraft, including two foreigners, were killed in the incident, Pokharel told PTI.
The victims included 18 Nepalese citizens, two of them children, and two foreigners, apart from three crew members. One of the foreigners was confirmed as a Chinese and the other was a Kuwaiti national.
The plane caught fire after it crashed, according to a search and rescue team at the site of the accident. Residents in the area said they heard a huge explosion and saw flames shooting up from the forest and called security officials.
A preliminary investigation suggested that low visibility due to a cloud of dust shrouding the area following dry landslides in Mount Annapurna might have caused the crash.
According to Home Ministry officials, there were dust particles in seven villages around the crash site.
Earlier, three helicopters were dispatched from Kathmandu to locate the aircraft while Nepal Army, Armed Police Force and Nepal Police personnel had also been mobilised.
"The weather at both origin and destination airports was favourable and the airport cleared for departure by the control tower at Pokhara," the airline had said in a statement on its website.
Since 1949 - the year the first aircraft landed in Nepal - there have been more than 70 crashes involving planes and helicopters, in which more than 700 people have died.
In 2012, child actor Taruni Sachdev and mother Geeta Sachdev were among 15 people killed when a dornier aircraft crashed close to the Jomson airport. Taruni died in the Agni Air Flight CHT plane crash on her 14th birthday on May 14.
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