Four were in a critical condition after the blast flung the front of commercial and residential property at 121 Second Avenue across the street in the popular East Village on Thursday, the fire department said, triggering the collapse of the next-door building and a huge blaze.

The cause of the incident was under investigation but New York Mayor Bill de Blasio said the initial impact appeared to have been caused by plumbing and gas work at the site.     

Witnesses several blocks away described hearing a loud bang and thick smoke could be seen high over the Manhattan skyline.

"It was crazy loud. The windows were shaking," said Philip McElroy, a 23-year-old student, who was visiting a friend two blocks away.

"There was a lot of smoke and part of the building was blown out."

The incident quickly heightened safety fears, a year after eight people were killed when a gas explosion leveled two apartment buildings in East Harlem in northern Manhattan on March 12, 2014.

"At this moment we know of 12 individuals who are injured, three of them who are in critical condition," de Blasio said, as the fire department raised the number of critically injured to four.

"Our thoughts, our prayers are with everyone of them and of course we are praying that no other individuals are found injured and that there are no fatalities."

The fire department said 123 Second Avenue collapsed entirely and 121 partially, and that two other buildings were also damaged.

Pommes Frites, a shop selling Belgian-style fries, was located at 123 Second Avenue, according to its website.

A gaping hole, where once a commercial and residential building stood, was engulfed in thick smoke and reduced to debris, showed a photograph posted on Twitter by the New York Fire Department.

The Red Cross set up an emergency site in a school to support those made homeless, as well as neighbors and family members, de Blasio told a news conference.

More than 250 fire fighters were still battling to control a large blaze at neighboring properties.

Thick smoke filled the street and emergency workers shut down six blocks on Second Avenue, said an AFP reporter at the scene.