The mishap took place at Kandiwara near Kokernag, 70 km from Srinagar, when the driver of the bus lost control while negotiating a blind curve, the sources said.
They said the bus was on its way to Kokernag from Diyalgam to drop students of a private high school when the accident took place.
Rescue teams, comprising of locals and police, immediately swung into action and recovered bodies of four children, including a girl and evacuated 13 others including the driver to district hospital Anantnag, where three more children succumbed to injuries.
Among the injured, eight children and the driver have been referred to Srinagar for specialised treatment as their condition was stated to be critical, the sources said.
Meanwhile, Peoples Democratic party (PDP) and State unit of CPI(M) expressed profound grief and anguish over the road accident and asked the government to provide free of cost medical treatment to the injured students and ex-gratia relief to the families of the deceased students.