"The samples sent to the laboratory have tested positive for bird flu. It is the H5N1 strain," said agriculture ministry spokesman Manoj Pandey.
It is the country's third outbreak since 2006 and the first since India, home to 1.1 billion people, declared itself free of the disease last November.
The poultry deaths were reported from farms in the state's Morgram village, in Birbhum district, about 125 kilometres (75 miles) from the state capital Kolkata.
"Blood samples of the dead chickens in the village tested positive," said West Bengal's minister for animal resources development, Anisur Rahaman.
He said an isolation centre had been opened in a hospital near the affected village and 300 health workers had been sent with medicines and protective gear.
"Authorities have ordered to cull the chickens and all poultry within five kilometres (three miles) of Margram village. The government will pay compensation."
"Health officials have been asked to launch a campaign over public address systems and distribute leaflets," he said, adding that "panic has gripped the village."
Humans are typically infected by coming into direct contact with infected poultry, but experts fear the deadly H5N1 virus may mutate into a form easily transmissible between humans.
Wild migratory birds have been blamed for the global spread of the disease, which has killed more than 200 people worldwide since 2003.
India's state of West Bengal borders densely populated and impoverished Bangladesh, where authorities have been struggling to contain an outbreak of the virus.