A major recue effort is under way, using dozens of ships and helicopters.
Several hours after the disaster, at least 290 people remained missing, local media said.
South Korean officials had earlier said that 368 people had been plucked to safety, but later said there had been a counting error.
They have now revised down the number rescue to about 180, Yonhap news agency reported.
Images showed the ferry listing at a severe angle and then later almost completely submerged, with only a small part of its hull visible.
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