Image caption Many of those on board have already been rescued, some with life rafts

More than 100 people are missing after a ferry with up to 350 on board sank off Papua New Guinea's northern coast, officials say.

At least 230 people have been rescued in a joint Australian-PNG operation.

The MV Rabaul Queen sank east of Lae, the South Pacific country's second-largest city, some 10 miles (16km) from shore.

Papua New Guinea Prime Minister Peter O'Neill said everything would be done to establish the cause of the accident.

"We will leave no stone unturned," he said.

"We cannot afford to continue to lose our people's lives. Sea transport is one of the most important forms of transportation in the country."

Media playback is unsupported on your device Media caption Australian Prime Minister Julia Gillard: ''This is obviously a major tragedy''

Australia PM Julia Gillard earlier said the incident was a "major tragedy" and that the authorities were urgently trying to find out if any Australians were on board.

An Australian maritime safety authority spokeswoman said that so far 238 survivors had been rescued.

Capt Nurur Rahman, from the National Maritime Safety Authority, said he was hopeful of finding more people alive in the tropical waters.

"People have survived for up to two days,'' he told the Associated Press news agency.

He added that the number of people who were on board may be lower than previously reported - at about 300.

The MV Rabaul Queen, operated by PNG company Star Ships, was travelling between the towns of Kimbe and Lae when it sent out a distress signal in early on Thursday.

The Australian Maritime Safety Authority, which is assisting the country's authorities, has confirmed that the vessel sank approximately 16km (9.9 miles) off Finschhafen.

Eight ships and three helicopters assisted in the rescue efforts and three Australian fixed-wing aircraft were also sent, says the BBC's Duncan Kennedy in Sydney.

A Star Ships spokesman told AFP news agency that "bad weather" was believed to have sunk the ship.

Star Ships is one of Papua New Guinea's biggest ship operators.