The bus veered off the road at about 6.30pm local time (5.30pm GMT) and toppled down a small hillside in the town of Canico, coming to a rest against the roof of a house.
Mayor Filipe Sousa, Reuters reports, said there were 55 people – mainly German tourists – plus a tour guide and driver onboard, both of whom reportedly survived the crash.
Sousa confirmed 17 of the initial fatalities were women and 11 men. Another woman later died in hospital.
Portuguese news agency Lusa reports the injured have been taken to hospital in the island’s capital, Funchal.
An investigation is under way.
While no Britons are understood to have been involved in the incident, the Foreign Office confirmed it was seeking information from the authorities in Portugal and was ready to support any British people requiring assistance.
