- Communication lost at about 20 miles west of Dawei town: army chief
- Ships and planes have been scrambled to search for plane
- Passengers believed to be family of military men based in coastal areas
Navy ships and aircraft had been searching since the afternoon when the plane lost contact with air traffic controllers.
More than a dozen children were believed to be among the passengers on the plane travelling from the southern city of Myeik to Yangon.
"Now they have found pieces of the damaged plane in the sea 136 miles (218 km) away from Dawei city," said Naing Lin Zaw, a tourism official in Myeik, adding the navy was still searching the sea.
An air force source confirmed to AFP that a navy search and rescue ship had found pieces of the plane in the sea an hour's flight south of Yangon, Myanmar's commercial capital.
The commander in chief's office said the plane lost contact at about 1:35 pm (07:05 GMT) off Myanmar's southern coast.
There was conflicting information about the number of people on board.
Giving an updated figure, the office said 106 passengers were on board -- soldiers and family members -- along with 14 crew.
The air force source said more than a dozen of those on board were children.
Four naval ships and two air force planes were sent to search for the plane, which was flying at an altitude of more than 18,000 feet (5,486 metres).
It is monsoon season in Myanmar but there were no reports of bad weather at the time the plane went missing.
Military air woes
The plane was a Y-8F-200 four-engine turboprop, a Chinese-made model still commonly used by Myanmar's military for transporting cargo.
The army said it was delivered in March last year and had logged 809 flying hours.
The former military junta bought many of the aircraft from Myanmar's giant neighbour during their 50 years of isolated rule, when they were squeezed by Western sanctions.
A former executive at the aviation ministry said many of the aircraft in Myanmar's fleet were old and decrepit.
"Myanmar air force has very bad safety performance," he said, asking to remain nameless.
Myanmar's military fleet has a chequered recent history of plane crashes.
All five crew died when an air force plane burst into flames soon after taking off from the capital Naypyidaw in February last year.
Three army officers were killed in June when their Mi-2 helicopter crashed into a hillside and burst into flames in south-central Bago.
A surge in demand for air travel as Myanmar opens up has stretched the impoverished country's aviation infrastructure, in particular in remote airports.
Commercial jets have also suffered frequent incidents.
The worst in recent years was in 2012 when an Air Bagan jet crash-landed in thick fog and burst into flames short of the runway at Heho airport, killing one passenger and a motorcyclist on the ground.