Military spokesman Sagom Tamboen said the transport plane, built in 1980, plunged to the ground near an air force base in East Java province, slamming into a residential neighborhood and then skidding into a field.
It was not clear what caused the crash, but several witnesses described seeing its right wing fall off while it was still in the air.
"I heard at least two big explosions and saw flashes of fire inside the plane," said Lamidi, a 41-year-old peasant who was working in a nearby rice field and ran for cover. "The wing snapped off and fell to the ground."
The plane was carrying at least 109 passengers and crew, including troops and their families, when it went down in Geplak, a village 325 miles (520 kilometers) east of the capital, Jakarta. At least 10 children were among them.
At least 98 people were killed, including two on the ground, and 15 others were injured, said Bambang Samudro, chief of the military air base in Magetan. Many of the injured suffered severe burns.
"Before the plane crashed, I heard several blasts and then it started wobbling from left to right," 2nd Pvt. Saputra said from his bed at the air force hospital. "It crashed to the ground and I was pinned under several people. I heard screaming before losing consciousness."
The country's air force, long underfunded and handicapped by a recently lifted U.S. ban on weapons sales, has suffered a series of accidents, including a Fokker 27 plane that crashed into an airport hangar last month, killing all 24 onboard.
The air force has operated C-130s - the backbone of its transport wing - since the early 1960s, when it received a batch of 10 from the United States in exchange for the release of a CIA bomber pilot shot down in 1958 while supporting an anti-government mutiny.
About 40 more were delivered over the next 20 years, many secondhand and provided by Washington before the Clinton administration imposed sanctions on military deliveries because of violence that broke out during East Timor's 1999 break for independence.
The air force complained that many of the planes quickly became unserviceable because of the lack of spare parts. Though the embargo was lifted several years ago, the air worthiness of many is still in question.
Tamboen promised a full investigation of all military aircraft.
There also have been a series of commercial airline crashes in recent years which killed more than 120 people. The EU responded by banning all Indonesian carriers from flying to Europe.
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