More than 100 people remained missing on Wednesday after a South Korean ferry with 477 people aboard capsized off the country's southwest coast, Yonhap news agency said.

Yonhap and YTN television said 368 people had been rescued from the vessel, which sank after issuing a distress call early on Wednesday. Those numbers could not be independently verified.

At least two people are confirmed dead in the incident.

South Korean officials said the rescue operation was still underway and it was difficult to offer any confirmed information about the missing people.

The ferry, identified as the Sewol, was carrying 475 passengers and crew and 150 vehicles, according to Korean port authorities, when it began to list badly as it neared Jeju island, about 100 km (60 miles) south of the Korean peninsula.

Within hours, television pictures showed the Sewol lying on its port side. Soon after the ship had completely capsized, with only the forward part of its white and blue hull showing above the water.

An official from the Danwon High School in Ansan, a suburb in the capital Seoul, said all its 338 students and teachers had been rescued safely but that could not be confirmed by the coast guard or other officials involved in the rescue.

The students and teachers were on a field trip to Jeju, said the official, who asked not to be identified.

A distress signal was sent from the ship early on Wednesday, the South Korean coast guard said, triggering a rescue operation involving dozens of ships and helicopters.

There was no immediate indication of what caused the ship to list and roll on its side, although one witness told YTN television there had been a "loud impact and noise" before it started sinking.

The coast guard later said one person had been found dead inside the sinking ferry. An official from the Mokpo Hankook hospital on the mainland said another person had died soon after arriving at its emergency ward.

Television and still pictures showed the badly listing ferry surrounded by debris, rescue ships, helicopters and at least one inflatable lifeboat.

Chang Kyung-hak, a crew member on a ship sent from a nearby town to help with the rescue, said his vessel was carrying dozens of people, including students who had been saved from the ferry, and that most were in fair condition.

However, two people were suffering minor burns, Chang told Reuters by telephone. Weather conditions were fair, he said, and the sea appeared calm.

The ferry had left from the port of Incheon, about 30 km (20 miles) west of the capital, Seoul, late on Sunday.

A government official said the rescue operation involved 18 helicopters and 34 navy and coast guard vessels.

The ferry, which also carries cars and trucks, has a capacity of about 900 people and has an overall length of 146 metres (480 feet) and weighs 6,586 gross tonnes. Shipping records show it was built in Japan in 1994.

A passenger on board told YTN television the first rescue helicopter had reached the vessel soon after the distress signal was sent.

The unidentified passenger, who spoke before people were evacuated, sounded calm and said those on board were in their cabins but were having trouble keeping their balance.

Heavy fog had set in overnight off the west coast, leading to the cancellation of many island passenger ferry services.  - Reuters