MUMBAI (AFP) - A three-storey residential building on Mumbai's outskirts collapsed on Friday, killing two children and trapping more people inside, in the city's third such incident in recent months, officials said.

"There are two dead, one is a two-month-old girl and one is a seven-year-old boy. There are more trapped inside and rescue operations are in full swing," said Sandeep Malvi, spokesman for the Thane municipal corporation.

He said the reason for the early morning collapse of the structure, built in 1979, was not yet clear.

A police official in the Thane control room said 12 people had been injured and sent to hospitals for treatment.

"We fear that about five more people could be trapped inside."

The incident happened in Thane district, about 35km from the centre of Mumbai, close to the scene of another apartment block collapse in April that killed 74 people.

Two builders and seven others were arrested in connection with that tragedy, in which many of the victims were poor daily wage earners and their families, who were living with them at the site of the partly-finished block.

It was the deadliest building collapse since 2010 when 69 people were killed in New Delhi in a similar incident.

Just last week, the cave-in of part of a five-storey apartment block in central Mumbai killed 10 people.

The building collapses have highlighted widespread shoddy construction standards in India, where huge demand for housing and pervasive corruption often result in cost-cutting and a lack of safety inspections.