The Greek coastguard said 150 people had been saved from the Italian-registered Norman Atlantic, which was carrying almost 500 passengers and crew when it sent a distress signal after fire broke out on its lower deck.
As high winds and rough seas impeded efforts by other ships to rescue those still on board, it was unclear whether there had been casualties or if any passengers were in the water.
"The ship is still on fire, the floor is burning," passenger George Styliaras told Greek TV by telephone, adding that smoke was making it difficult to breathe. "We don't know how long we can hold on."
Cold winter temperatures would make survival in the sea difficult unless rescue came quickly.
Shipping Minister Miltiadis Varvitsiotis said the combination of very bad weather, with winds of up to 55 miles (88 kilometres) per hour and the fire, made the operation extremely complicated.
"We are doing everything we can to save those on board and no one, no one will be left helpless in this tough situation," he told reporters. "It is one of the most complicated rescue operations that we have ever done."
Coastguard officials said the Norman Atlantic, which was also carrying more than 200 vehicles, was 44 nautical miles northwest of the island of Corfu when it radioed for help.
Coastguard spokesman Nikos Lagkadianos said 150 people were on a rescue boat, of whom 42 had been successfully transferred to the container ship Spirit of Piraeus. Rough seas made it difficult for the rescue boat to approach the ship.
A journalist who was aboard Cruise Europa, a nearby cruise ship, said he could see passengers on the upper deck of the Norman Atlantic clinging to the railings as they waited for rescue.
A coastguard official said nearby passenger and container ships were attempting to form a ring around the burning vessel to try to form a windbreak to allow small rescue boats to approach but rough seas made the manoeuvre difficult.
Varvitsiotis said there were 478 passengers and crew aboard the ship, more than the 466 originally reported. Of those, he said 268 were Greek, while a foreign ministry official said there were also passengers from several other countries including Germany, Italy, Austria, Turkey, France and the Netherlands. Many appeared to be truck drivers.
One Greek passenger told a television reporter that language differences hindered communication between passengers and crew.
While rescue vessels and aircraft had been dispatched to the scene, early rescue work was being coordinated from nearby passenger and cargo ships. A fire-fighting vessel was trying to approach the ferry.
Tug boats were being sent from both Greece and Italy but would take some time before arriving.
The fire broke out in the lower deck garage of the vessel but there were differing accounts of when it started. Initial reports said the fire began at around 6.00am local time (0400 GMT) but Italian officials put the time at 4.30am.
Officials said both Italian and Albanian authorities were taking part in the operation, which was being conducted in extremely difficult conditions with strong winds, heavy seas and very cold temperatures.
The Norman Atlantic is a 26,900-tonne, roll-on roll-off ferry chartered by Greek ferry company Anek, the coastguard said. According to marine traffic data, it was built in 2009 and previously operated in Italy. – Reuters
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