Breaking information that is "not encouraging and not good news", Home Minister P Chidambaram said at a place between Kyela and Lobothang a party sent by circle officer sighted what appears to be an aircraft.
"They have sighted three bodies. This sighting has been made from a height. They have not been able to go down to the place where the aircraft is (lying) crashed. The message has been given to the nearest Army post which is sending a team," he told reporters.
"The search party will take about half-an-hour to one hour to reach the suspected crash site," he said.
Chidambaram said that an Army team has been dispatched on foot to the crash site and "we will know more about the crash site and the bodies lying there once they reach there".
The place is located at a height of 4900 metres and, therefore, it will take some time and difficulty to reach there, he said.
"When they reach there, they will communicate to us what they have found there," the Home Minister said, adding he was unable to state as to what type of aircraft or whose bodies they were.
"But I am afraid it is on the flight path of the chopper after it had taken off from Tawang. We are keeping our fingers crossed and let us wait for the official word to come from the team," he said.
The single engine four-seater Pawan Hans helicopter with Dorjee and four others on board went missing soon after taking off from Tawang on Saturday.
Besides Khandu, others on board were pilots Captain J S Babbar, Captain T S Mamik, Khandu?s security officer Yeshi Choddak and Yeshi Lhamu, sister of Tawang MLA Tsewang Dhondup.
Inclement weather had prevented teams from carrying out aerial searches.