Italian police have ended a dramatic ordeal for 51 students and their teachers who were tied up and held captive by their bus driver who threatened to torch everyone inside the vehicle.

Key points: The bus driver set fire to the bus as the children escaped

The bus driver set fire to the bus as the children escaped He is now facing terrorism charges

He is now facing terrorism charges No-one was seriously hurt

Police broke glass windows in the back of the bus and got all the passengers to safety without serious injury before the flames destroyed the vehicle, authorities said.

The driver, an Italian citizen of Senegalese origin in his 40s, said he was protesting against migrant deaths in the Mediterranean, Commander Luca De Marchis told local TV.

He is now facing terrorism charges.

Mr De Marchis said the driver threatened the passengers, telling them that "no-one would survive today" as he commandeered the bus carrying two middle-school classes to a gym in Cremona province, some 40 kilometres from Milan.

Italy's national press agency ANSA quoted one of the students as saying the driver took all their phones and ordered the teachers to bind the students' hands with cable ties, threatening to spill petrol and set the bus ablaze.

ANSA said the teachers deliberately left some of the cable-tie handcuffs loose.

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Students drove escape

One of the children described his terror in an interview with television station La Repubblica, his face obscured due to his age. His name was not given.

"We were all very afraid because the driver had emptied the gas canister onto the [bus] floor," he said.

"He tied us up and took all the telephones so we could not call the police."

"One of the telephones, belonging to a classmate, fell to the ground, so I pulled off the handcuffs, hurting myself a bit, and went and picked it up. We called the Carabinieri and the police."

Authorities said an adult called an emergency operator, while one of the students called a parent, and they alerted authorities, who set up roadblocks.

The bus was intercepted on the outskirts of Milan by three Carabinieri vehicles, which were able to force it to stop.

"While two officers kept the driver busy — he took a lighter and threatened to set fire to the vehicle with a gasoline canister on board — the others forced open the back door, breaking two windows," Mr De Marchis said.

While the evacuation was still underway, the driver started the fire.

Mr De Marchis credited the "swiftness and courage" of the officers who got all the children and their teachers out "with no tragic consequences."

Some of the passengers were treated at a hospital, mostly for cuts and scratches, he said.

The driver was treated for burns.

ANSA identified him as Ousseynou Sy, and said he was being investigated on suspicion of kidnapping, intention to commit a massacre, arson and resisting law enforcement.

The prosecutor's office later said it would add terrorism as an aggravating circumstance, since the event caused panic.

The driver set fire to the bus while passengers were being evacuated. ( AP via ANSA: Daniele Bennati )

ABC/AP