A boat which was carrying 46 people caught fire and is now sinking off the central Queensland coast.

Police said the boat, the Spirit of 1770, was about 10 nautical miles from the Town of 1770 when the fire began.

It was returning from a trip to Lady Musgrave Island.

It is believed all those on board took to life rafts and there were no reports of injuries.

The passengers are being taken by authorities to a triage centre in the Town of 1770 for assessment.

A rescue helicopter that had been tasked to the emergency was redirected back to base.

It is understood the fire started in the engine room of the 23-metre catamaran.

The boat has been extensively damaged.