A ferry is believed to have sunk in bad weather off Papua New Guinea with as many as 350 people on board, its operator said, adding that Australian rescuers were at the scene

Star Ships said it lost contact with the MV Rabaul Queen at about 6am on Thursday (2000 GMT Wednesday) while travelling between Kimbe and Lae in the east of the Pacific nation.

"Bad weather, I think (it is) believed to have sunk," Star Ships spokesman John Whitney told AFP, adding that there were up to 350 on board.

"(There are) survivors. At the moment rescuers from Australia are at the site. No fatalities have been reported yet."

Australia's foreign office said it "has responded to a request for assistance by arranging for aircraft to overfly the area, and will respond to other requests".

"The shipping company advises that they do not believe that there were any foreigners on board, but our High Commission (embassy) is seeking to confirm this, including whether any dual nationals may have been affected," a foreign office spokeswoman said.

"The government of Papua New Guinea is managing the response to this incident. Local rescue efforts are currently under way."

PNG's National Maritime Safety Authority (NMSA) said the ship had capsized but it was awaiting more details from officials at the site.

"We don't have any accurate information as yet, a search and rescue team went out early this morning but they haven't got back to us yet," a spokeswoman said.

Martin Mosi, head of the National Disaster Centre, said two helicopters and a ship had been dispatched to search the area in addition to the two search and rescue vessels sent out by the NMSA.

He was awaiting word on casualties.

Mosi said it was "very difficult to say" what the cause may have been.

"Is it weather, is it overloading or is it something to do with the vessel itself? We do not know but that will certainly come to light very soon," he added.

Star Ships, among PNG's largest passenger ship operators, runs regular services to the nation's outlying islands including to New Britain's Kimbe, a popular dive site that attracts tourists from across the world.