Italian authorities fear the death toll in the Lampedusa boat sinking has passed 300, as Italy holds a day of national mourning for the tragedy.

The boat was carrying 500 African immigrants, mostly from Eritrea, Somalia and Ghana, when it caught fire and sank off the Sicilian island of Lampedusa. People onboard had attempted to attract attention after its motor failed by lighting a fire, which eventually ignited the fuel.

Rescuers have so far found at least 134 dead bodies while nearly 200 others are still missing, according to reports. Around 150 people were pulled alive from the water during the rescue operation.

The dead include a pregnant woman and a child aged between three and four years old.

The chief of health services on Lampedusa told Radio 24: "We need only caskets, certainly not ambulances."

Rescuers and local fishermen described the scene as a "sea of heads" with scores of people waving arms and screaming for help in the water.

Italian Interior Minister Angelino Alfano said following his visit to the island: "I never imagined I would see such an horrific scene. It is a scene that offends the West and Europe. Let us hope that the European Union realises this isn't an Italian problem but a European one."

The Lampedusa disaster is just the latest in a series of disasters to have afflicted migrants making perilous, illegal journeys from Africa to the European Union.

"Every day, thousands of men and women desperately try to escape war-torn countries and misery, travelling on crumbling boats, which are old and overcrowded. These boats are destined to sink. The rough sea and approach of winter increases the risk," said coastguard chief Felicio Angrisano in a statement.

The boat's Tunisian captain has been arrested by authorities on smuggling charges.

"We were jam-packed, we couldn't even move," some of the asylum-seekers on board the boat told Italy's ANSA.

Meanwhile, United Nations special rapporteur for migrant rights, Francois Crepeau, blamed Italy's "repressive" immigrant policies for the latest disaster.

During his address at the UN General Assembly, Crepeau said: "We have to find other ways ... repressing irregular migration only does one thing - it entrenches and it empowers the migrant smugglers."