Scores of boatpeople remained missing today after an asylum-seeker boat sank off West Java, claiming at least four lives, including those of three children, the Australian reported.
About 160 people had survived the sinking of the boat, which was carrying more than 200 asylum-seekers believed to be from Iran, Iraq and Sri Lanka, local military officials said.
The boat capsized in heavy seas last night off the fishing town of Cidaun in western Java, from where rescuers set out in their own boats and in vessels lent by the police and fishermen.
People at the scene this morning said four deaths had been confirmed, including those of one boy aged about 18 months and two girls, aged two and seven years.
The children were Sri Lankan and a young Iranian woman was also confirmed dead, a witness said.
Earlier, Indonesian rescue officials said they did not know exactly how many were on board the vessel.
"So we're focusing on searching for any more that may be out there," said Bandung search and rescue chief Rochmali.
"We don't know where these people are from. We will just focus on ensuring they're well and making sure no one else is still at sea," he said.
Survivors were today gathered in two villages, Sukapura and Pantai Jayanti, and officials said they would be taken to hospital.
The boat had set out from Indonesia just days after Kevin Rudd warned all future boatpeople would be sent to Papua New Guinea and have no chance of being settled in Australia as refugees.
Mr Rudd said the tragedy reinforced the need for his PNG solution, arguing it would stop asylum-seekers from risking their lives at sea.
"This underlines the need for policy changes in Australia on asylum-seekers policy to send a very clear message to people-smugglers to stop sending people by boat to Australia," the Prime Minister said.
"We have seen too many drownings, we have seen too many sinkings, too many innocent people being lost at sea."
Four boats have already been intercepted by Australian authorities since the PNG solution was announced, carrying 299 people.
The sunken vessel brings the number of asylum-seekers attempting to test the policy so far to about 500.
Mr Rudd said the boats would not stop coming straight away and the policy would take some time to work.
"We also said that the people-smugglers would in fact try to test our resolve, to see whether we are actually able to implement this policy," he said. "I say there is a huge national interest involved in making sure this policy works."
Officials from the Indonesian search and rescue service Basarnas said a search for the sinking boat was launched after asylum-seekers began sending out distress calls late last night.
Locals at Cidaun said the fishing boat was carrying many women and children as well as male asylum-seekers.
According to initial reports survivors told rescuers there there were only about 100 life jackets on the wooden vessel.
A Cianjur district military officer, Captain Yayan Ruhiat, indicated the boat had sailed from Garut district, West Java, earlier yesterday.
An Iranian survivor told News Corp Australia that groups of asylum-seekers had been taken on smaller boats out to a big boat.
The big boat had a problem with its engine after about two hours of travel, he said.
The Australian Maritime Safety Authority said a rescue operation was being coordinated by Indonesian authorities.
Despite Mr Rudd's edict on Friday that Australia would accept no more asylum-seekers who arrived on boats, many Iranians and Afghans have said they would try to make the journey and at least two vessels are known to left Java headed for Christmas Island since Monday.
Hours before the rescue operation was launched by Indonesia, Australian authorities intercepted a boat carrying 38 asylum-seekers off Christmas Island.
HMAS Bathurst found the boat west of the island late yesterday after it was detected by RAAF maritime patrol aircraft.
Border Protection Command transferred the 38 passengers and two crew on board to Christmas Island for initial checks.
Australia has struggled to stem an influx of asylum-seekers arriving by boat, with record numbers turning up in 2012 and more than 15,000 so far in 2013.
Hundreds have drowned making the journey as recently as last week a boat sank, killing four people.