A powerful earthquake has sent a building crashing down on tourists at a bar on the Greek holiday island of Kos, killing two people and injuring 200.

Rescue officials said two men from Turkey and Sweden died in the collapse at the White Corner Club when the 6.5-magnitude quake struck at about 1.30am, rattling Greek islands and the Turkish Aegean coast.

Hundreds of revellers were in or near the popular bar in the old town of Kos when the building partially collapsed.

At least five other people were seriously injured on Kos as tourists and local residents scrambled out of buildings, some even leaping from balconies.

Five of the injured were taken by helicopter to hospital on the island of Crete, officials said.

"There was banging. There was shaking. The light was swinging, banging on the ceiling, crockery falling out of the cupboards, and pans were making noise," said Christopher Hackland, a Scottish diving instructor.

"There was a lot of screaming and crying and hysterics coming from the hotel. It felt like being at a theme park with one of the illusions, an optical illusion where you feel like you're upside down."

Tens of thousands of tourists spent the night outdoors on Kos, many sleeping on sunbeds along beaches as a quake-related sea swell subsided.

The tremor damaged churches, an old mosque, and the port's 14th century castle, along with old buildings in the town.

In nearby Turkey, the quake caused cracks on walls of some buildings in the resort of Bodrum, flooded the lower floors of seafront hotels and restaurants and sent moored boats crashing towards the shore.

Turkish authorities said 70 people were treated in hospitals in Bodrum for minor injuries, but damage was light.

Several Greek government ministers, as well as rescuers with sniffer dogs and structural engineers, travelled to Kos overnight to co-ordinate the rescue effort.

Authorities said there were no reported injuries of refugees and migrants at camps on the island.

A seafront road and parts of the island's main town were flooded for several hours, and the rising seawater even pushed a boat on to the main road and caused several cars to slam into each other.

Ferry services were cancelled until further inspection, with passengers rerouted to nearby islands.

Greek officials said the quake was 6.5-magnitude and the numerous aftershocks were weaker but still could put at risk the buildings that were already damaged.

The epicentre was six miles south of Bodrum and 10 miles east-north-east of Kos, with a depth of 6 miles.

"The damage on the island (of Kos) is not widespread. The airport is working, and the road network and infrastructure are in good shape," Greek government spokesman Dimitris Tzanakopoulos said.

"The damage was at the bar and the old part of the town and we had the very unfortunate deaths of the two people."

The collapsed building dated to the 1930s, according to Kos mayor Giorgos Kyritsis. "There are not many old buildings left on Kos. Nearly all the structures on the island have been built under the new codes to withstand earthquakes."

Rescuers checked for trapped people inside houses across Kos at dozens of villages and other sites, but said the damage was confined to the island's main town.

Greek health officials said 13 people have been airlifted to hospitals in Athens and on the islands of Rhodes and Crete following the earthquake.

A spokesman for a state hospital in the Cretan city of Iraklio said they had received four patients, including two people in critical condition, one with a head injury and one who had to have a leg amputated.

Authorities have not listed the nationalities of those seriously injured, but police officials involved in the operation said that one Norwegian national, one Turk, one Albanian and one Greek were included in the list of airlifted patients.