More than 50 homes, many with people still asleep inside, were buried when the landslide hit Kaokalam village about 3am on Friday, villager Ninga Role told Reuters by phone.
The death toll was almost 300, among them Role's brother and cousin, he said.
Bodies are being recovered after a landslide hit the village of Kaokalam in PNG. (Ninga Role/AAP PHOTOS)
Australian broadcaster ABC and other local media reported more than 100 people had been killed.
One man who turned back to try to save his two children was buried along with his extended family, Role said.
Social media footage posted by Role showed people clambering over rocks, uprooted trees and mounds of dirt as they searched for survivors.
Women could be heard weeping in the background.
"It's very impossible - the area covered by the landslide is large and there are rocks and trees everywhere," Role said.
"It's very difficult to get them out."
The village is in Enga province, about 600km north of the capital Port Moresby.
PNG Prime Minister James Marape says authorities are working diligently to address the disaster. (Ninga Role/AAP PHOTOS)
Prime Minister James Marape said in a statement he had yet to be fully briefed but that authorities were responding to the disaster.
"We are sending in disaster officials, PNG Defence Force and the Department of Works and Highways to meet provincial and district officials in Enga and also start relief work, recovery of bodies, and reconstruction of infrastructure," Marape said on Friday.
"I will release further information as I am fully briefed on the scale of destruction and loss of lives."
PNG police did not immediately respond to requests for comment.
The landslide hit a section of highway near the Porgera gold mine, operated by Barrick Gold through Barrick Niugini Ltd, its joint venture with China's Zijin Mining.
"The extent of the damage is still being assessed, so it is too early to know the impact, if any, on the operations of the Porgera Gold Mine which is 100km away," a spokesperson for Barrick Gold said.
Porgera currently has sufficient fuel on-site to operate normally for 40 days and other critical supplies for longer, the spokesperson said.
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