Homes and a caravan park near the Weardale Railway in Wolsingham were evacuated over fears that flammable gas was leaking from the tanker.
The driver, in his 20s and from South Durham, was airlifted from the scene after being thrown from his cab.
He died in Newcastle General Hospital on Wednesday afternoon, police said.
We may have to right the vehicle and move it along the tracks somehow, maybe even using a train
Chris Hockaday, County Durham and Darlington Fire Service
The Calor Gas tanker makes deliveries in rural areas to remote households and farms which use Liquid Petroleum Gas (LPG) as domestic fuel.
The vehicle, a smaller version of a petrol tanker, was thought to have been carrying around 13,000 litres of LPG when it careered off the winding country road.
Fire crews and Calor Gas experts have detected no gas leaking from the tanker, but face a difficult task removing the wreckage.
Chris Hockaday, from the County Durham and Darlington Fire and Rescue Service, said: "There are a few options to consider - one is to see if we can decant the gas out into another vehicle.
"The problem is that it's gone off next to a bridge so it will be difficult to get any heavy lifting gear into position.
"We may have to right the vehicle and move it along the tracks somehow, maybe even using a train."
The tanker came off the road and plunged down an embankment
The Environment Agency has also been alerted in case any diesel from the tanker has leaked into the River Wear.
The Weardale Railway runs steam trains on a five-mile stretch of restored track between Stanhope and Wolsingham Station, which is close to the scene.
In a statement the rail company said: "There will be no further services on Weardale Railway until further notice and we apologise to our passengers for any inconvenience this may cause.
"We have appointed an incident manager and have alerted the Rail Accident Investigation Board and Her Majesty's Rail Inspectorate.
'Feeling confident'
"We will not be able to assess the damage until the site of the accident has been declared safe by the fire brigade and the tanker removed from the track."
Local resident Bill Hobson said local residents were "feeling confident" about the police and fire service's handling of the situation.
It is not yet known when those evacuated will be allowed back into their homes.
In May, a van containing gas cylinders exploded in the town's market place, killing the driver and causing widespread damage to both residential and commercial properties.
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The bridge where the accident happened. 
The driver of a propane gas tanker has died after his vehicle fell 70 feet onto a railway line in Country Durham, northern England. The tanker left the road and smashed through a bridge near the small town of Wolsingham and landed on the Weardale Railway below with the driver being thrown from the cab.

The driver, who was in his twenties, had been airlifted to a hospital in Newcastle-upon-Tyne but later died from his injuries. 

The Calor Gas tanker was said to be carrying 13,000 litres of liquefied petroleum gas at the time of the accident and nearby homes were evacuated. The fire crews who responded to the incident did not detect any gas leaking from the tanker.

Chris Hockaday, from County Durham and Darlington Fire and Rescue Service described the problems they were facing, "There are a few options to consider - one is to see if we can decant the gas out into another vehicle. The problem is that it's gone off next to a bridge so it will be difficult to get any heavy lifting gear into position. We may have to right the vehicle and move it along the tracks somehow, maybe even using a train." 

The Weardale Railway operates over a five mile section of restored track between Stanhope and Wolsingham. 

In a statement the railway company said, "There will be no further services on Weardale Railway until further notice and we apologise to our passengers for any inconvenience this may cause. We have appointed an incident manager and have alerted the Rail Accident Investigation Board and Her Majesty's Rail Inspectorate. We will not be able to assess the damage until the site of the accident has been declared safe by the fire brigade and the tanker removed from the track."