Witnesses said barriers at the crossing were open when the train hit the bus. Transport Minister Mohamed Rashad and the head of the railways authority resigned, and President Mohamed Mursi said those responsible would be held to account.
The bus was broken in half by the force of the crash. Blood was spattered on the front of the engine and school bags and text books, some bloodstained, were strewn around.
All but two of the dead were children, aged around four to eight, said a senior security official in Assiut, near the crash site. One woman and the bus driver also died, he said.
Egypt's roads and railways have a poor safety record and Egyptians have long complained that successive governments have failed to enforce even basic safeguards, leading to a string of deadly crashes.
Prime Minister Hisham Kandil travelled to the area to review the situation. But devastated and angry people in one village from where the children had been picked up to travel to school said they would bar entry to any visiting officials.
"We won't accept any officials in the village. They only want to come to appear in the media," said Alaa Ahmed from al-Hawatka, where some children killed on the bus came from. They were travelling to a school near Manfalut, about 300 km (190 miles) south of Cairo.
Some victims' families protested at the crash site. Many other Egyptians across the nation were also shocked and angered.
"It is so shameful and a big disgrace to this government. All of its members, and not only one minister, should quit. That is what I know would happen in any decent country," said Mona Ahmed, a 60-year-old mother of three, in Cairo.
State media reported that as well as 50 dead, 15 or more people were injured. A medical source said as many as 28 were injured, 27 of them children.
"They told us the barriers were open when the bus crossed the tracks and the train collided with it," said Mohamed Samir, a doctor at Assiut hospital where the injured were taken, citing witness accounts.
Assiut Governor Yahya Keshk also said the crossing was open. "The crossing worker was asleep. He has been detained," he told state television.
The doctor said the bodies of many of those killed were severely mutilated, illustrating the force of the crash.
"I saw the train collide with the bus and push it about 1 km along the track," said Ahmed Youssef, a driver.
Officials said the level of destruction and mutilation made it difficult to count and identify the bodies.
Mursi ordered his ministers to offer support to the families of those killed, the official news agency said.
Egypt's worst train disaster was in 2002 when a fire ripped through seven carriages of an overcrowded passenger train, killing at least 360 people.
At that time, when Mursi was an opposition member of parliament for his Muslim Brotherhood group, he accused the then prime minister and officials of "gross negligence".
Many more have been killed in rail accidents since then despite pledges from successive governments to improve safety.
Earlier this month, at least three Egyptians were killed and more than 30 injured in a train crash in Fayoum, another city south of Cairo. In July, 15 people were injured in Giza, close to the capital, when a train derailed.
Reflecting frustration at the state of public transport, Cairo metro workers went on strike this week complaining about poor levels of safety and maintenance.
Accidents involving multiple deaths are also common on Egypt's poor quality roads. A crash on Cairo's outskirts on Saturday involving a minibus killed at least 11 people, security sources said.