Merchant vessels that responded to a distress call managed to pluck 17 survivors from the Indian Ocean late Sunday and were searching for others, Australia's Home Affairs Minister Brendan O'Connor said.
About 40 people were believed to be aboard the boat when it went down near the Cocos Islands, sparsely populated atolls about 1,500 miles (2,400 kilometers) northwest of the Australian coast and about 800 miles (1,300 kilometers) south of Indonesia.
Government officials said it was too early to say whether those on board were asylum seekers trying to reach Australia, though aspects of the emergency - such as an unseaworthy boat carrying so many people in waters sometimes used by human traffickers - signaled that may be the case.
"All the efforts right now are legitimately dedicated to attending to lives at risk at sea," Prime Minister Kevin Rudd told reporters.
There has been a surge of boats carrying asylum seekers toward Australia. Some 35 boats carrying about 1,770 asylum seekers have arrived in Australian waters this year, mostly from Iraq, Afghanistan, Iran and Sri Lanka.
Many of them pay thousands of dollars to people smugglers who put them to sea in leaky boats from Indonesia and sail south. Most end up caught by customs authorities and detained in an immigration camp on remote Christmas Islands while their refugees applications are assessed, a process that can take months or years.
The Australian Maritime Safety Authority received distress signals on Sunday from the boat, and the authority asked any vessels in the area to respond, authority spokeswoman Rhianne Robson said.
A Taiwanese fishing trawler and the merchant ship LNG Pioneer arrived in the area late Sunday and deployed life rafts and began plucking people from the water. An Australian military plane and one from Australia's Royal Flying Doctor Service were on their way to search for more survivors.
Air Chief Marshal Angus Houston, the chief of Australia's defense forces, said the boat that sent the distress signal was intact when the rescue vessels first arrived.
"Somehow or other during the process of the interaction between the ship and the trawler and also the stricken vessel, there's been a capsize and people have ended up in the water," Houston told reporters.
