Villagers were sleeping when the massive slip of earth, trees and debris crashed down a mountain side on Saturday night onto Kenagi village on the border of Eastern Highlands province, the Post Courier newspaper said.
Local councillor David Nondo said one body, of a 10-year-old boy, had been recovered but it would take days to dig up the dead from the landslide which cut the crucial Highlands Highway.
"The area is now a burial ground and we do not want people passing through at will," Nondo told the paper.
The Post-Courier said eight houses were buried, with three people rushed to hospital in serious conditions after being injured in the accident.
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Provincial Police Commander John Kale told the Australian Broadcasting Corporation that heavy rain appeared to have caused the disaster, which was followed by a second collapse yesterday morning.
"There is a very big landslide starting from the top of the mountain past the road and all the way down to the river," he said.
Torrential rains have caused landslips in the Eastern Highlands before, with at least seven people killed in 2009 when one engulfed two buses and three houses.