The victims, three men and four women aged between the 20s and 70s, sustained a range of neck, back, ankle and abdominal injuries and are in stable condition, Ambulance Victoria told Xinhua in a statement.
The balloon took off from the Glenburn area at approximately 7am carrying 16 passengers before landing "heavily" on a private property at Dixons Creek, about 46km north-east of Melbourne.
Seven News understands people may have been thrown out of the basket after the balloon stalled and made a hard landing.
Seven people have been injured after a hot air balloon crashed in Victoria's Yarra Valley, but paramedics say it could have been a lot worse.
A SES spokesman said the hot air balloon was involved in some type of incident.
Seven passengers, mostly in their 60s, suffered back injuries and fractures from the accident.
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"I thought, "that doesn't look right".
The Australian Transport Safety Bureau said it was interviewing the pilot and witnesses to determine the cause of the crash.
'It's a huge open field... the recovery vehicles were there.
Emergency services have been unable to confirm the number of injuries, although a spokesperson said there were "quite a few injured".
Multiple ambulances were called to Dixons Creek, some 60km north of Melbourne, where the balloon's basket was found on its side.