He told reporters that the panchayat leader Thupten has identified the body of 56-year-old Dorjee while the other four bodies have been charred beyond recognition.
Defence Forces are expected to airlift bodies and the chief minister's will be moved to Itanagar, say sources.
Handique, however, said that only after the divisional commissioner takes charge of the body and the formalities are completed, they could officially confirm news about Dorjee.
Handique said that the body would be sent to Khandu's home village in Tawang, "but the final rites will be observed simultaneously at Tawang and Itanagar with state honours." If transporting the body by chopper was delayed, it would be sent by road from Tawang, he added.
Khandu's family members had rushed to Tawang immediately after the chopper went missing. United Progressive Alliance chairperson Sonia Gandhi and Prime Minister Dr Manmohan Singh may arrive in Itanagar to pay their last respects to Khandu, Handique said. He said they were being apprised of developments from time to time and might arrive in Itanagar honouring the sentiments of the state's people.
Honouring the wishes of the people, Khandu's body would be brought to Itanagar and kept at his bungalow for the people to pay their last last respects, Handique said. Asked about the successor to Dorjee, he said, "Everything will be taken care of."
Union ministers V Narayansamy and Mukul Wasnik, who were monitoring the situation, left for New Delhi On Saturday morning. A pall of gloom descended on the state capital with thousands thronging Khandu's official bungalow at Niti Vihar. MLAs, officials and local leaders were among those in grief.
A group of youth enraged over the news ransacked the local Pawan Hans office. The glass panes of the director's chamber and booking counter were damaged in the attack, police sources said.
"Never before has Arunachal witnessed such massive development the way Khandu did after taking over the reins on April 9, 2007," Power Minister Jarbom Gamlin who is also state government spokesman said while recalling his last meeting with Khandu on April 24. His views were echoed by Rural Works Department Minister Kalikho Pul. Arunchal Home Minister Tako Dabi said "Let God bless the people of Arunachal, particularly family members to bear the irreparable loss."
Earlier in the day, Chidambaram said the information from the search teams was "not encouraging and not good news."
The single engine four-seater Pawan Hans helicopter with Khandu and four others on board went missing soon after taking off from Tawang on Saturday.
Besides Khandu, others on board were pilots Captain J S Babbar, Captain T S Mamik, Khandu's security officer Yeshi Choddak and Yeshi Lhamu, sister of Tawang MLA Tsewang Dhondup. Inclement weather had prevented teams from carrying out aerial searches since Saturday.
Image: Arunchal Pradesh Chief Minister Dorjee Khandu