Turkey's military command said it launched an air strike on PKK militants after an intelligence drone spotted a group of people moving toward its sensitive southeastern border under cover of darkness late Wednesday.

Turkey's main pro-Kurdish Peace and Democracy Party (BPD) said the planes bombed a group of villagers from the Kurdish area of the southeast who were smuggling sugar and gas across the border.

BDP leader Selahattin Demirtas called the attack a massacre, saying all the victims were civilians.

"It's clearly a massacre of civilians, of which the oldest is 20," Demirtas said in a statement that called on Turkey's Kurdish population for calm.

But Ankara's joint military command said in a statement that its jets bombed an area inside Iraq "regularly used" by PKK rebels.

"The area where this happened is called Sinat-Haftanin, in northern Iraq, where there is no civilian population, and where the terrorist organisation has bases," the military said in a statement, referring to the outlawed Kurdistan Workers' Party (PKK).

The governor's office in Sirnak province said "35 people were killed and another person wounded in an aerial operation" and said an investigation was under way.

"A crisis centre has been set up in the area and prosecutors and security officers have been sent" to the southeastern village of Ortasu near where the air strike took place, Governor Vahdettin Ozkan said.

Ertan Eris, a local BPD councillor, told pro-Kurdish Roj TV from the scene of the bombing that the dead were among a group of up to 40 people, ranging in age from 16 to 20, who were engaged in cross-border smuggling.

The pro-Kurdish Firat news agency released photos showing bodies wrapped in blankets, lying on the snow side by side.

Television also showed angry and weeping villagers gathered around the bodies. Locals used mules to carry the bodies down from snowy mountain slopes to the village.

PKK spokesman Ahmed Denis said in a statement to AFP in Baghdad that those killed were civilians.

"Those people were transporting goods between the two countries and the government of Turkey knew that. We do not have any base for our party in those areas. We condemn this operation against the Kurdish people and we call for world opinion to work to stop this massacre against our people in Turkey."

Kurdish media and local sources close to the PKK have presented slain rebels as civilians after previous incidents in the area, where the militants have been known to operate.

The PKK took up arms in Kurdish-majority southeastern Turkey in 1984, sparking a conflict that has claimed about 45,000 lives. It is labelled a terrorist organisation by Ankara and much of the international community.

Clashes between Kurdish rebels and the army have escalated in recent months.

The Turkish military launched an operation on militant bases inside northern Iraq in October after a PKK attack killed 24 soldiers in the border town of Cukurca, the army's biggest loss since 1993.

The army then killed 36 Kurdish rebels in Kazan Valley in Hakkari province, near the Iraqi border.

Media reports in Turkey and abroad, as well as the BDP, have accused Turkey of using chemical weapons against the rebels, allegations strongly denied by the military.

Iraqi officials and the BDP in August claimed Turkish warplanes killed a family of seven in northern Iraq during an operation to bomb PKK bases.

Turkey denied the charges and summoned Iraq's ambassador to protest the claims. An anonymous Turkish diplomat called the allegations "a PKK game".

In November Turkey bombed the Sulaimaniyah and Arbil provinces of Iraq's autonomous northern Kurdish region, wounding a civilian, Kurdish officials said.