The identities of those on board have yet to be confirmed, though sources said they are all thought to be British service personnel.
The crash in southern Afghanistan is the largest single loss of life for the NATO-led International Security Assistance Force (ISAF) since a US helicopter crashed in December after being hit in a Taliban insurgent attack.
"The MoD can confirm that a UK helicopter crashed in southern Afghanistan today. The incident is under investigation and it would be inappropriate to comment further until families have been notified, "the ministry said in a statement.
The ISAF statement did not name the province where the crash occurred and made no reference to whether any insurgents were active in the area.
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But local officials in southern Afghanistan said that the helicopter came down in volatile Kandahar and was not attacked by militants.
"A helicopter belonging to NATO troops has crashed in Takhta Pul, Kandahar province. It was doing military exercises and crashed as a result of technical fault," said Zia Durrani, the provincial police spokesman.
There was no immediate claim of responsibility from insurgents.
Immediately after that crash, US officers suggested the helicopter had come down due to a mechanical failure but that the crew may then have come under fire.
Officials later said that Taliban militants brought down the aircraft.
Aircraft crashes have been a regular risk for the ISAF mission in Afghanistan, with troops relying heavily on air transport to battle the Taliban insurgency across the south and east of the country.
NATO troop movements have fallen sharply over the last year as soldiers withdraw from the 13-year war.
Britain currently has around 5,200 troops in the country, making it the second-largest ISAF contributor.
All NATO combat forces are due to pull out by the end of December.
If all five on board the helicopter are confirmed to be British service personnel, it would take the number of British troops killed in operations in Afghanistan above 450.
Before the crash, 448 British troops had been killed since operations began in October 2001.
The deadliest incident was in September 2006, when all 14 British personnel on board a Nimrod surveillance aircraft were killed in a crash caused by a leaking fuel pipe.