The incident occurred at the four-star Hotel Campomar in a village called Isla near the port city of Santander.
Nine British youngsters, a monitor and a hotel worker suffering from the effects of suspected carbon monoxide poisoning have been taken to Marques de Valdecilla Hospital in Santander as a precaution for other ailments such as asthma.
Five people are reported to be seriously injured, although none are British. A group of pensioners from Malaga are also thought to be affected by the poisoning.
A hotel worker said: “They are all okay. They only found about something was wrong when ambulances started arriving.
“The problem has been on the second floor where Spanish pensioners were staying and were confined to four rooms. It all happened about 8am this morning.
“One of the Spanish people taken to hospital is in a serious condition and our latest information is that seven people from that group are in hyperbaric oxygen chambers.
“The youngsters are aged about 10 and are from the same school group but I’m not authorised to tell you where they come from and it’s not possible to speak to them at the moment because they’re busy with other things.”