At least three people were killed and rescuers were looking for other victims on Saturday after a large Italian cruise ship carrying more than 4,000 people ran aground overnight, took on water and tipped over.

A cruise ship that ran aground is seen off the west coast of Italy at Giglio island January 14, 2012. A large Italian cruise ship carrying more than 4,000 people ran aground on a sandbar off the west coast of Italy overnight, and rescue workers were quoted on Saturday as saying at least three people had been killed in the incident. [Photo/Agencies]

A dramatic nighttime rescue operation involving lifeboats, ships and helicopters was continuing hours after the 114,500 gross tonnes Costa Concordia hit a sandbar near the island of Giglio as passengers were eating dinner.

"We were sitting down do dinner and we heard this big bang. I think it hit some rocks. There was a lot of panic, the tables overturned, glasses were flying all over the place and we ran for the decks where we put on our life vests," passenger Maria Parmegiano Alfonsi told Sky Italia television.

The 290-metre-long ship took on water and started listing.

Pictures taken by rescued passengers after daybreak and broadcast on television showed the shiny, multi-story luxury vessel on its side and about half submerged on the sandbar just a few hundred metres (yards) from Giglio.

Coast guard Captain Luciano Nicastro and police official Giuseppe Lunardi said three people were confirmed dead, fewer than the six reported earlier by Italian media.

But, speaking on live television, Nicastro said rescue workers were still searching the ship, which had just started a winter Mediterranean cruise, and the waters around it.

Lunardi said some people had jumped off the ship while it was listing.

"The rescue operation is still going on," Fire brigades official Luca Cari said on television about 10 hours after the accident.

He said rescue workers were still checking decks that remained above water and that scuba divers would then check the decks that have been submerged.

"This is difficult because the ship is enormous," Cari said, adding that the ship was now listing at about 90 degrees but would likely remain in that position and not sink because of the sand below.

Most of the 3,200 passengers and 1,023 crew on board the ship had been evacuated to the island of Giglio and from there were being taken to the mainland.

Alfonsi said she and other passengers were first put up in churches on the island and later, with only some blankets to protect them from the cold, were later taken to the mainland.

Another unnamed coast guard official on television said the ship was believed to have suffered a large gash on its side.

Most of the passengers on board were believed to be Italian but the cruises are popular with foreigners too.

The cruise ship company said the cause of the incident was being investigated.

Captain into custody

The captain of the cruise ship ran aground off the Italian west coast, Francesco Schettino, was taken into custody, the ANSA news agency said on Saturday.

The captain, who has denied any wrongdoing, is being questioned by local authorities. He claimed "the rock the ship impacted with was not marked in the nautical char," according to local media.

Cruise ship came dangerously close to shore

The captain of the Italian cruise ship which ran aground late on Friday appears to have taken the vessel very close to the shore in a dangerous manner, officials said on Saturday.

"There was a dangerous close approach which very probably caused the accident, although it will be for the investigation to establish that fully," coast guard spokesman Luciano Nicastro told SkyTG24.

He said the captain then attempted a safety manoeuvre, setting anchor and bringing the ship closer to the shore to facilitate a rescue.

Firefighters reach two alive

Firefighters have reached two people alive on the stricken Italian cruise ship Costa Concordia, the Italian news agency Ansa reported on Sunday.

The firefighters had made voice contact with the couple earlier and found them in a cabin.