A fire blamed on an electrical fault killed 13 teenage boys at a Muslim school in Myanmar's main city Tuesday, police and witnesses said, raising fears of a further eruption of tensions after a wave of religious unrest.

Police and soldiers flanked the scorched blue mosque and religious school in central Yangon, where dozens of children had been sleeping when the blaze broke out early Tuesday.

Authorities launched an inquiry into the fire, stressing that early indications suggested a tragic accident. Police said two guards at the building had been charged with negligence.

The assurances came amid Muslim suspicions that they had been targeted following a spate of Buddhist-Muslim killings and arson that has spread across central Myanmar in recent days.

"The whole country is worried now for Yangon, and is wondering whether this was a crime," Ye Naung Thein, of Muslim organisation Myanmar Mawlwy federation, told AFP at the scene, urging people to wait for the result of the inquiry.

Hundreds of mourners, many praying and weeping, packed into a Muslim cemetery in a suburb north of Yangon to bury the victims, with many among the crowd voicing suspicions the fire was started deliberately.

A teacher, who was awoken as flames tore through the building and who helped evacuate survivors, told AFP he had smelt petrol during the blaze -- echoing the testimony of several witnesses.

"I think someone started the fire intentionally," said Khin Maung Hla, 35, adding the victims were aged between 12 and 15.

Waiting to bury her 13-year-old boy, Nyunt Zaw wept uncontrollably. "I lost my youngest son. I am devastated," she told AFP.

Emergency services had to break down locked doors to free the children sleeping in a dormitory, according to government spokesman Ye Htut.

"Please don't believe some news on the Internet portraying this case as a religious conflict," he posted on his Facebook page.

Communal tensions are high in the former army-ruled country after at least 43 people died last month in a wave of intra-religious violence that saw mosques and homes burned down in several towns.

The government has imposed emergency rule and curfews in some areas.

Yangon's chief minister Myint Swe told reporters authorities had launched a probe into the fire, adding that initial findings suggested a fault with wiring under the staircase was to blame.

He said about 70 children were trapped upstairs when the blaze broke out.

"The children could not get out of the building because there were iron bars (on the windows) and the only way out was the stairs," he said, adding that the victims died of suffocation.

Electrical fires are common because of poor safety standards in poverty-stricken Myanmar, which is emerging from decades of military rule.

Two Muslim guards at the building failed to react to an alarm, said Yangon police chief Win Naing, adding one was in custody and the other had run away.

Myint Swe said witness reports of a smell of fuel could be explained by the generator used to power the building.

Muslim leader Shine Win told AFP earlier that he had spoken to students and teachers who reported slipping on an oily liquid on the ground floor while escaping, and urged the government to "reveal the truth".

US ambassador Derek Mitchell in a statement expressed "heartfelt condolences" to the loved ones of all those affected.

"Given the severity of this event, we encourage the government to work closely with members of the community to conduct a thorough and transparent investigation into the cause of the fire," he said.

Yangon has been tense but mostly peaceful following the religious clashes which broke out in the town of Meiktila and later spread.

The conflict poses a major challenge for President Thein Sein, who has won international praise for his reform efforts since taking office two years ago.

The situation has calmed in recent days after the former general on Thursday vowed a tough response to the violence, which he blamed on "political opportunists and religious extremists".

Violence involving Buddhists and Muslims in the western state of Rakhine last year left at least 180 people dead.