Flames spread through the London Duck Tours vessel on a stretch of the River Thames near Lambeth Bridge.
Many of those on board leapt into the water as flames took hold and thick black smoke billowed from the burning boat.
Passengers were later hauled to safety by rescue workers and crews on passing tour barges.
A woman and a child were taken to hospital with suspected smoke inhalation while a number of tourists were treated at the riverside.
A police spokesman said the nature of the injuries "could have been a lot worse".
The vessel was carrying 28 tourists and two crew at the time of the fire.
London Fire Brigade said the craft suffered 33% damage in the fire, which broke out shortly before midday. The blaze was brought under control in less than half an hour.
A police spokesman said: "A number of people were recovered from the water. All passengers and crew have been accounted for."
The damaged tour vessel was pulled away from the scene by a London Fire Brigade craft and the brigade has now launched an investigation into how the fire started.
The Port of London Authority is also expected to investigate the blaze.
According to London Duck Tours each boat is modified to meet "stringent" safety regulations which are set by road and river authorities.