South Korea said on Wednesday that two people were killed and 368 rescued from a ferry that capsized off the coast of Jindo Island, in South Korea's South Jeolla province, with 477 people on board - mostly high-school students - as divers searched for scores still missing.

The passengers are reported to include 324 students and 14 staff of Danwon High School in Ansan, Gyeonggi Province, who were traveling on a school trip to Jeju Island.

Officials voiced concern over the fate of the 107 people unaccounted for, fearing that many may have been trapped as the vessel listed sharply before capsizing.

"So far, 368 have been rescued," Mr Lee Gyeong Og, the vice-minister of security and public administration, told a press briefing in Seoul. He added that two people had been confirmed dead, one male and one female, and added that a detachment of South Korean Navy Seals were continuing to search the submerged ship. The woman was identified as 22-year-old Park Ji Young, a staff worker for the ferry company. Jung Cha Woong, a male student of the Danwon High School has also been confirmed dead.

Dramatic television aerial footage showed terrified passengers wearing life jackets clambering into inflatable boats as water lapped over the rails of the vessel as it sank.

Many appeared to have been rescued by fishing and other commercial vessels who were first on the scene before a flotilla of coastguard and navy ships arrived, backed by helicopters.

The 6,825-tonne ferry, which had sailed out of the western port of Incheon on Tuesday evening, ran into trouble some 20km off the southern island of Byungpoong.

Coast guard officials said they had received a distress call at 9am. The weather conditions were described as "fine" with moderate winds and sea swell.

The cause of the accident was not immediately clear, although rescued passengers reported the ferry coming to a shuddering halt after hearing a loud noise - indicating it may have run aground.

Photos broadcast on television showed the ship initially tilted by more than 45 degrees on the port side with helicopters flying overhead, and then fully capsized with only a small section of the stern showing above the water.

One local official who had taken a boat to the site and arrived an hour after the distress signal was sent, said he was "very concerned" about those still unaccounted for.

Of the 448 passengers on board the ferry, which had been bound for the southern resort island of Jeju, 324 were students travelling with 14 teachers from a high school in Ansan, south of Seoul.

There were 29 crew members manning the vessel, which was also carrying 150 cars.