The school bus hit the youngsters on School Lane just off Neuadd Lane in Llanfair Caereinion at about 3.25pm on Monday .
Dyfed-Powys Police said the driver of the bus - which wasn't carrying any passengers - was also taken to hospital.
Air ambulances were among the emergency services sent to the scene. The Welsh Ambulance Service has now confirmed that three of the injured children were airlifted to hospital.
A statement from Dyfed-Powys Police said officers were at the scene of a road traffic collision on School Lane.
“A school bus and a number of young pedestrians were involved in the collision. The male driver of the bus and five children have been taken to hospital. There were no passengers on the bus," the force said.
“The road is closed with diversions in place. Please avoid the area if possible.”
Both Ysgol Uwchradd Caereinion and Ysgol Gynradd Llanfair Caereinion are currently being supported by Powys County Council's School Service officers.
A spokesman for Powys County Council said: “The council can confirm that a school bus has been involved in an incident this afternoon in Llanfair Caereinion.
"Emergency services have been in attendance.
"Officers from the council’s Schools Service are currently in the town providing support to both the high school and primary school."
Welsh Parliament member for Montgomeryshire Russell George paid tribute to the emergency services and offered his best wishes to the community.
He said: "From what I understand, the emergency services were on the scene very quickly, for which I thank them.
"I want to pay a great tribute to the community of Llanfair Caereinion as I know they are very close and support each other, so they will be very supportive of each other at this time."
Wales Air Ambulance and Wales Ambulance Service have been contacted for a comment.
AW Coaches was approached for a comment, but declined to do so for the time being.