Two pilots and five passengers were on board the Cessna 441 Conquest when it crashed in shallow waters in Roebuck Bay at Broome about 11.30am on Thursday.
"Shortly after the aircraft took off from Broome's runway 10, it encountered a loss of engine power," Australian Transport Safety Bureau chief commissioner Angus Mitchell said.
All seven people onboard were transferred to hospital with a range of non-life-threatening injuries, paramedics St John WA said.
One person suffered minor head injuries, WA Police said.
The air safety watchdog has started investigating the incident.
Investigators would interview the pilots, passengers and any witnesses, examine the aircraft and recover evidence, such as the plane's flight recorders and maintenance records, Mr Mitchell said.
The area where the twin turboprop plane crashed is understood to be a mangrove-lined sandy beach near the Broome township.
Aviation tracking site flightradar24 shows a Skippers Aviation-operated Cessna 441 Conquest plane left Broome Airport at 11.08am bound for Mungalalu Truscott Airport, about 620 kilometres northeast of Broome.
A map on the website shows the plane took off in an easterly direction and crossed Damper Creek before the line, which appears to show the plane's route, stops about 3km from the end of the runway.
Skippers Aviation acknowledged the incident but declined to comment.
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