This boat was carrying 250 asylum seekers when it sank off East Java, killing some 200, in November last year. Photo: Jumai Evan Junardi

DOZENS of people are feared to have drowned and a frantic rescue operation was under way last night after a boat carrying up to 200 asylum seekers capsized on its way to Australia.

Two Australian navy ships and three merchant ships went to the scene - about 110 nautical miles north of Christmas Island - after an Australian surveillance aircraft spotted the stricken boat about 3pm.

West Australian Police Commissioner Karl O'Callaghan said up to 75 people may have drowned. About 40 survivors had been seen standing on the upturned hull, and others were in the water. ''We have grave fears for the remainder,'' he said.

The Maritime Safety Authority said life rafts had been deployed to the survivors, and 110 people had been rescued.

A spokesman said: ''Our primary focus at the moment is to rescue as many people as we can before nightfall''.

The disaster is the latest in a series in recent years involving asylum seeker boats that have been lost or broken up on their way to Australia.

The incident will intensify the bitter political debate in which the government and opposition blame each other for the impasse that has prevented offshore processing being used as an attempted deterrent to the people-smuggling trade.

Prime Minister Julia Gillard had a brief conversation about the unfolding tragedy with Indonesian President Yudhoyono at a breakfast event in Rio de Janeiro.

She said President Yudhoyono was ''of course distressed about the news'' and had assured her Australia and Indonesia would work together on the rescue.

Ms Gillard had been briefed by Home Affairs Minister Jason Clare and had spoken to acting Prime Minister Wayne Swan.

But she would not be drawn on questions of asylum policy, saying the immediate focus was the rescue.

It is believed the people on the capsized boat were mostly Sri Lankans. Indonesia's search and rescue authority, Basarnas, which was leading last night's operation, said Australian authorities had confirmed the boat originated in Sri Lanka.

One source said the vessel had been travelling in convoy with three others.