A Wolff luffing crane at a 62-flat housing site in Bow is understood to have toppled over backwards.
The jib crashed into the roof of two nearby terraced homes while the tower came down on the under-construction scheme.
The dead woman was found on the first floor of one of the houses.
Firefighters arrived at the scene and spent several hours freeing people trapped inside the damaged house.
Eyewitnesses said the crane driver had been rescued.
London Fire Brigade Assistant Commissioner Graham Ellis said: “A 20 metre crane collapsed onto a block of flats under development and into two terraced houses on Compton Close.
“Our Urban Search and Rescue crews undertook a complex rescue operation and used specialist equipment to search the properties.
“Sadly one woman died at the scene. The London Ambulance Service have confirmed that two people were taken to hospital with head injuries and a further two were treated at the scene.”
The crane was operating on a major housing site for NU Living, the in-house building arm of Swan Housing Association.
Crane behind my building just collapsed in Bow, London. At least one man crushed, crane went through 2 house. pic.twitter.com/pOBF4LcZmc
— Bridget Teirney (@bteirney) July 8, 2020
A spokeswoman for the housing association said: “Swan Housing Association /NU living is deeply saddened by an incident that has occurred at our Watts Grove development site this afternoon.
“Our thoughts are with those affected and their families at this difficult time.
“We would like to thank the emergency services for their swift and dedicated response and those who are supporting residents who have had to leave their homes as a safety precaution.
“Our staff are on site to provide support to the emergency response and the investigation.”
Unite national officer for construction Jerry Swain said: “There must be an urgent, full and complete investigation into the circumstances that led to this accident.
“The preliminary findings of which must be released in weeks, rather months or years, in order to ensure that similar accidents are avoided in the future.”