At least 50 people are dead, most of them children, and 77 wounded after an airstrike by the Saudi-led coalition fighting Shiite rebels hit a school bus driving in a busy market in northern Yemen.

The Saudi-led coalition maintains the strike on Thursday night (AEST) was targeting rebels, known as Houthis, who had fired a missile at the kingdom’s south on Wednesday, killing one person and injuring 11 others.

A spokesman for the health ministry, Youssef al-Hadri, said most of those killed in the retaliatory strike were under 15 years old.

Witnesses said the bus was carrying students who were heading to a summer school when the strike hit near Dahyan market in the province of Sa’ada, which is a rebel stronghold.

The International Committee of the Red Cross tweeted that one of the hospitals it supports “has received dozens of dead and wounded” after “an attack this morning on a bus driving children in Dahyan Market”.

The Saudi-led coalition said Wednesday’s projectile, fired toward the southwestern Saudi city of Jizan, was intercepted and destroyed but its fragments caused the casualties.

The statement, carried by the official Saudi Press Agency, said the missile was launched “deliberately to target residential and populated areas”.

Coalition spokesman Colonel Turki al-Malki was quoted by the Associated Press as saying the strike on the school bus was a “legitimate military action” and is “in accordance with international humanitarian law and customs.”

He also accused Houthi rebels of recruiting children and using them in the battlefields to cover for their actions.

US State Department spokeswoman Heather Nauert said US officials could not confirm all the details of the attack, but were concerned by reports of civilian deaths.

-with AAP