A photograph showed part of the plane suspended in a tall tree. On board were 14 people, including General Dongjai Pijit, who was Defence Minister as well as Deputy PM.
Sukan Mahalad, the Governor of the capital of Laos, Vientaine, and National Assembly President, Pany Yathortou, were also on board.
It is believed there were no survivors in the crash, which occurred about 10am today.
The flight was on its way to Xiangkhouang province to celebrate the 55th anniversary of the second division of the Lao People's Army, the source said. The event was cancelled.
Laos, officially the Lao People's Democratic Republic, is a landlocked country in Southeast Asia, bordered by Burma and China to the northwest, Vietnam to the east, Cambodia to the south, and Thailand to the west.