15 feared dead as unidentified boat sinks off Australia

About 15 people were feared dead on Monday after a boat carrying 39 sank in rough seas far off northwest Australia despite frantic rescue attempts by a passing merchant ship and fishing vessel.

Defence chief Angus Houston said the unidentified boat capsized and then sank after the LNG Pioneer ship and Taiwanese fishing craft responded to pleas for help in a remote area off Australia's Cocos Islands in the Indian Ocean.

It was not confirmed whether the boat was one of dozens of people-smuggling vessels that have headed to Australia this year carrying more than 1,700 asylum-seekers, many of them from Sri Lanka and Afghanistan.

"I understand when the first ship got there, this vessel was still intact," Houston said.

"Somehow or other during the process of interaction between the ship and trawler and also the stricken vessel, there's been a capsize and people ended up in the water."

Some 19 people were rescued by the Bahamas-based gas tanker and fishing boat, while an air force plane dropped a life raft near another five survivors, Prime Minister Kevin Rudd said.

"I think it's fair to say there are grave concerns about a number of those people -- we understand there were something like 39 people on board this vessel," Rudd told Fairfax radio.

A rescue ship was about a day's sail from the accident site off the tiny Cocos Islands and about 2,700 kilometres (1,700 miles) from the Australian coast.

"Our assets have been deployed, we have coordinated with other vessels in the area. This is a very difficult search environment," Rudd said earlier. He refused to be drawn on whether the boat was carrying asylum-seekers.

"Up until now the entire focus has been on search and rescue. There are international obligations that apply in these circumstances," Rudd said.

The boat started taking on water late on Sunday and issued a distress call, prompting a plea for help by Australian authorities that was answered by the LNG tanker and fishing craft.

"We obviously have grave concerns about the safety of those who are still in the water, given they've been in there for some time now," a spokeswoman for the Australian Maritime Safety Authority told AFP.

"The weather conditions aren't great, not too conducive to a search and rescue."

The Australian Customs Service said rescue aircraft returned to base on Monday night but would resume the search for survivors on Tuesday, according to the AAP news agency.

"The aircraft returned last night, to finish their search in the daylight hours," a spokeswoman told the agency. "The search and rescue will continue today."

Home Minister O'Connor also said authorities did not know whether the sunken vessel was carrying asylum-seekers, who are the subject of fierce domestic debate as the government struggles to deal with the influx.

"We do not at this point determine whether the passengers aboard the vessel were seeking asylum," he told reporters.

"We will do this once this rescue mission is over."

Australia has been forced to nearly double the capacity at its main refugee centre on Christmas Island in the Indian Ocean to cope with the sudden rise in asylum-seekers.

It is also involved in an ongoing stand-off over the fate of 78 rescued Sri Lankans, who are refusing to leave an Australian ship moored in Indonesia.