Eleven dead bodies have been recovered and the two remaining people are presumed dead, rescue services said after the Super Puma chopper transporting North Sea oil platform workers went down around midday in the archipelago off the coast of Bergen, Norway's second-biggest city.
Rescue services recovered eleven bodies but called off the search for the two remaining passengers five hours later saying they could not have survived the crash.
"We presume that all 13 are dead," Borge Galta, head of theJoint Rescue Coordination Centre of Southern Norway (Hovedredningssentralen i Sør-Norge - JRCC), told AFP.
The cause of Norway's worst helicopter accident in decades was not immediately known, but investigators seemed to be leaning towards a technical problem.
The helicopter was carrying 11 Norwegians, one Briton and one Italian when it crashed near the island of Turøy.
The helicopter broke into pieces near a small island and debris was found scattered on land and at sea. Part of the chopper containing the bodies of some of the victims was resting on the seabed under five to seven metres (16 to 23 feet) of water, around 20 metres from land, rescue officials said.
The aircraft's black boxes were later retrieved, Dagbladet newspaper reported.
Several witnesses described seeing a powerful explosion and people were seen in the sea.
"I head a helicopter coming from the North Sea. It was a strange sound. As I looked up the rotor flew off to the left as the helicopter came down to the right," eyewitness Jon Sekkingstad told broadcaster NRK.
"The helicopter exploded when it hit the ground. It was frightening," he added.
The helicopter was returning from the Gullfaks B platform, in one of Norway's biggest offshore oil fields, which is operated by state-owned Statoil.
Live footage showed leisure boats rushing toward the scene, where thick black smoke was billowing into the sky.
The helicopter was an EC225, also known as a Super Puma. Broadcaster NRK reported that ten helicopters of the same model in Norway were retired from use in 2012 after two of them were involved in emergency landings.
Norway's civil aviation authority said it had grounded all EC225 helicopters until further notice.
Chopper was due inspection
Verdens Gang newspaper reported that the owner of the helicopter, CHC Helikopterservice, had twice obtained a postponement of a scheduled technical inspection of the stricken helicopter.
A spokesman for Norway's accident investigation board, William Bertheussen, said investigators were trying to protect the crash site to get a full reading of the cause of the accident.
The crash was the deadliest of its kind in Norway since 1978, when a chopper plunged into the sea, killing 18 people.
On August 23, 2013, a Super Puma AS332 L2, an older model of the same helicopter, crashed into the North Sea near the Shetland Islands, killing four.
Gullfaks, one of Norway's biggest offshore oil fields, suspended its drilling operations until further notice.