Nearly 360 people have died after a fire tore through an overcrowded Honduras prison, the world's deadliest prison fire in a century.

With 856 inmates packed into barracks, the farm prison in the Comayagua province north of the capital Tegucigalpa was at double capacity, said supreme court justice Richard Ordonez, who is leading the investigation.

He said the fire, started by an inmate, began in a barracks where 105 prisoners were bunked. Only four survived. The fire raged through the prison, burning and suffocating men as rescuers desperately searched for keys to unlock the doors.

The local governor, who was once a prison employee, said an inmate called her moments before the blaze broke out and screamed: "I will set this place on fire and we are all going to die."

Comayagua governor Paola Castro said she called the Red Cross and fire brigade immediately. However firefighters said they were kept outside for half an hour by guards who fired their guns in the air, thinking they had a riot or a break-out on their hands.

Survivors also told investigators that the unidentified inmate yelled: "We will all die here" as he set fire to his bedding late on Tuesday night. "We couldn't get them out because we didn't have the keys and couldn't find the guards who had them," Comayagua fire department spokesman Josue Garcia said.

Other prisoners were set free by guards but died from the flames or smoke as they tried to flee into the fields surrounding the jail, where prisoners grew corn and beans on a state-run farm.

Rescuers carried shirtless, semi-conscious prisoners from the prison by their arms and legs. One hauled a victim away by piggyback.

Comayagua was built in the 1940s for 400 inmates. The blaze was the world's deadliest prison fire since 1930, when 322 prisoners were killed in Ohio in the US.

Honduran president Porfirio Lobo said on national television that he had suspended the country's top penal officials, including Mr Orellana, and would request international assistance in carrying out a thorough investigation. "This is a day of profound sadness," he said.