At least two people have died and several are injured on the Greek island of Kos after a powerful earthquake struck between Turkey and Greece, Greece's semi- official Athens News Agency (ANA) says.

The agency said the deaths were confirmed by George Kyritsis, the mayor of the island which is a major tourism resort.

Beachfront hotels full of holidaymakers were flooded in the coastal city of Marmaris, Turkey, while the effects were also felt on islands such as Crete and Rhodes.

Dozens of people were also injured on Kos and rescue crews were working through the night to dig people from under the rubble of buildings. 

Witnesses posted videos of staff and patients at Bodrum State Hospital cowering for cover, while tourists were forced to flee their rooms and gather anxiously in the street.

The earthquake caused cracks in one hotel on the party island of Kos, with tourists facing a sleepless night after they were evacuated from the building.

Separately, Greece's fire service said it had rescued three injured persons from a damaged building.

The US Geological Survey put the magnitude of the tremor at 6.7, with its epicentre off the Turkish coastal city of Marmaris on Friday morning.

It hit 10.3km from Bodrum, Turkey, population 6.4 million, and 16km from Kos in Greece, population 19,244.

The United States Geological Survey (USGS) reported the quake as intensity five, meaning the shake was likely to be moderate and the damage light. 

It struck at 1:31am (8.31am AEST) and was located off the southwestern coastal city of Marmaris. 

A magnitude 6.7 quake is considered strong and is capable of causing considerable damage, but the effects of this one would have been dampened by seas.

Turkey is prone to earthquakes because it is located between the Arabian plate and Eurasian plate.

Reuters, AAP