Most if not all of the dead have been described as Germans.
At least fourteen ambulances were said to be at the scene, next to Quinta Splendida Wellness & Botanical Garden. Early reports estimate at least 28 people to be dead.
Madeira, a Portuguese island, is a popular holiday destination.
He said most of those on board were German tourists and it is not yet know whether any other nationalities were involved in the accident.
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The incident happened near a botanical garden in the hotel district in Canixo, a quiet coastal community in the south-east of Madeira known as Canixo de Baixo.
The driver lost control of the bus, according to local outlets. He said the bus was carrying 55 people, and rolled down a steep hillside after veering off the road on a bend east of the capital, Funchal.
The accident happened at 6:30 p.m. local time on Wednesday on a road in Caniço on the eastern part of the island.
He said: "I have no words to describe what happened".