Tourists attending a full moon party in southern Thailand on New Year's Eve said they were left with burns when a pyrotechnic display showered revellers with red-hot embers.

Footage of the incident on the popular backpacker island of Koh Phangan was posted online, showing how cheers turned to screams of panic as a giant sign reading "Happy New Year 2017" was set alight at midnight.

Sparks could be seen raining down on the crowd, aided by an onshore breeze.

Eyewitnesses described mass panic as people scrambled to get out of the way of the display.

"It was just like a shower of burning sparks," Lucy Coyle, a 20-year-old British tourist attending the party with her boyfriend, told AFP.

"It felt like people were stabbing you with pins all over your body... everyone was trying to get out."

Coyle later posted pictures on Twitter of what she said were dozens of burns across her body.

Freddie Jacobs, another British tourist, said thousands were crammed onto the beach at the stroke of midnight, many under a sign they had no idea was about to be set alight.

"My girlfriend fell to the floor, she was getting so many burns I had to cover her like a blanket," the 23-year-old said, adding he and his partner were covered in burns the next day.

Backpackers flock to Koh Phangan for its famously raucous full moon parties. But its laid-back charm belies an equally relaxed attitude to safety.

Police confirmed the incident but played down tourist reports of injuries and mass panic.

"One female tourist aged around 30 was slightly injured, she got treated and went away," Colonel Somchai Noppasri, the island's police chief, told AFP.