More than 100 missing passengers were feared trapped inside an overloaded ferry when it sank off Papua New Guinea, according to a maritime official, as rescuers scoured the ocean for more survivors.

So far, 246 people have been plucked to safety in a joint rescue operation conducted by PNG and neighboring Australia after the MV Rabaul Queen sank on Thursday, Feb 2 morning.

Australia's Maritime Safety Authority (AMSA) said the ship went down about nine nautical miles off the coast and the survivors reached the eastern town of Lae in the early hours of Friday morning.

It said three merchant vessels remained on the scene searching, assisted by two Australian planes and two local helicopters. But rescue coordinator Captain Nurur Rahman told AFP high winds and big seas were making it difficult, AFP reported.