Madrid/IBNS: Spain and Portugal were hit by a major power outage on Monday that hit public transport, caused large traffic congestion and delayed airline flights as utility operators scrambled to restore the grid.

The Spanish and Portuguese governments convened emergency cabinet meetings after the outage left millions without power, and also affected a part of France bordering northeastern Spain briefly.

Portugal's utility REN confirmed an electricity cut across the Iberian Peninsula that also affected part of France, while Spanish grid operator Red Electrica said it was working with regional energy companies to restore power.

"All plans for the phased restoration of energy supply are being activated, in coordination with European energy producers and operators," a REN spokesperson told the media.

"REN is in permanent contact with official entities, namely the National Civil Protection Authority. At the same time, the possible causes of this incident are being assessed."

Spanish radio stations said part of the Madrid underground was being evacuated. The power outage caused traffic jams in Madrid city centre as traffic lights stopped working, Cader Ser Radio station reported.

In France, grid operator RTE said there was a brief outage. However, the power has been restored, and the RTE is investigating the cause.

Hundreds of people stood outside office buildings on Madrid's streets, and there was a heavy police presence around key buildings, directing traffic as well as driving along central atriums with lights, according to a Reuters witness.

One of four tower buildings in Madrid that houses the British Embassy had been evacuated, the witness added.

Local radio reported people trapped in stalled metro cars and elevators.