A man and a woman, believed to be the bus driver and one of the car drivers, were confirmed dead at the scene of the accident on the A4177 near Hatton Country Park in Warwickshire.
The single-decker bus was carrying 21 children when it struck two cars at 4pm yesterday.
A 16-year-old schoolboy on the bus was knocked unconscious and had to be freed from the wreckage by firefighters before being airlifted to hospital.
A woman was also seriously injured, according to West Midlands Ambulance Service.
Four pupils needed further treatment for minor injuries at hospital in Warwick while the remaining 16 were allowed to return home after being checked over by paramedics.
The bus was carrying school pupils from Aylesford and Myton schools and is thought to have crashed with one car head-on before hitting a tree.
Paramedics set up a treatment area close to the scene to administer first aid.
An ambulance service spokeswoman said: "Crews arrived at the scene to find a school bus and a car which had been involved in a collision. The bus also collided with a tree.
"Both vehicles sustained very significant damage in the crash. Two adults suffered significant multiple injuries in the crash and were both confirmed dead at the scene.
"A woman from the car sustained chest and abdominal injuries and was transferred by land ambulance to University Hospital Coventry and Warwickshire."
Rita Telford, 59, who lives near the scene of the crash, described hearing a "horrendous bang".
She told the Daily Mirror: "I could see the schoolchildren standing there in shock. Some had blood on them and were crying.
"We brought out some drinks to try and help with the trauma, but the police asked us to get them into a safe place so we took 10 into our garden."
Speaking at the scene yesterday, Ch Insp Lucy Sewell said: "This is a serious collision in which two people have sadly lost their lives and a number of young people have been injured.
"We are committed to protecting people on the roads in Warwickshire and we will be thoroughly investigating the scene of this collision to try to find out the circumstances surrounding how it occurred.
"At this time our thoughts are with the families of those who have lost their lives and we will be ensuring they receive the full support of our family liaison officers."
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