About 350 Papua New Guineans were on board the Rabaul Queen when it went down in the Solomon Sea about last morning, according to local media reports here.
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The ship was headed for the PNG north-coast town of Lae from the West New Britain town of Kimbe.
Australian rescuers saved 238 passengers, most of them students and trainee teachers, from drowning after the ferry sank, but fears remained for more than 120 were still missing. "Over 200 people had been rescued - most of them from the water," rescue co-ordinator Captain Nurur Rahman said, adding that several passengers were still unaccounted for.
The search for the missing passengers -- mostly university students -- resumed at daylight. Officials said there were fears people had been trapped in the ferry.
Capt Rahman said the rescuers are scouring the area for more survivors. He said it was too early to say why the ferry went down, refusing to speculate on whether the ship was overloaded.
Most of the survivors who have returned to Lae were taken to the local hospital. "None of them had sustained any real injuries. They were pretty cold and miserable," Lae Chamber of Commerce president Alan McLay told Australian media.
Meanwhile, Ferry operator Rabaul Shipping said that there were 350 passengers and 12 crew onboard.
Relatives of the passengers, angered by a lack of information, threw rocks at the company's office in Kimbe on Thursday, Australian media reported. The local police said it had to move the staff to an undisclosed location.
