Pope Francis and United Nations chief Ban Ki-moon have united in calls for action after as many as 700 migrants drowned when their boat capsized in the Mediterranean en route to Europe.

The UN refugee agency (UNHCR) and Italy's coastguard said only 28 people had survived the Sunday sinking, which is being described as the deadliest such disaster to date in the Mediterranean.

Reports suggested there had been about 700 people on board the 20-metre fishing boat, officials said.

"It seems we are looking at the worst massacre ever seen in the Mediterranean," UNHCR spokeswoman Carlotta Sami said.

Malta's prime minister Joseph Muscat said rescuers were at the scene searching for survivors among corpses floating in the water.

"They are literally trying to find people alive among the dead floating in the water," he said.

"This could possibly be the biggest tragedy to have ever taken place in the Mediterranean.

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"Children, men, and women have died."

Pope Francis also urged EU leaders to act to stem the loss of life.

"These are men and women like us, brothers seeking a better life," he said in his weekly address to the Roman Catholic faithful in St Peter's Square, urging leaders to "act decisively and quickly to stop these tragedies from recurring".

UN secretary-general Mr Ban said he was "shocked and deeply saddened" by the reports of the latest boat disaster.

Mr Ban "appeals to the international community for solidarity and burden-sharing in the face of this crisis," said a statement from his spokesman.

He said governments must not only improve rescue at sea but also "ensure the right to asylum of the growing number of people worldwide fleeing war who need refuge and safe haven".

Boat capsized as passengers tried to board rescue vessel

Coastal authorities in Italy and Malta picked up a distress signal from the stricken vessel around midnight (local time) on Saturday, when it was about 126 kilometres off the Libyan coast and 177 kilometres south of the Italian island of Lampedusa.

The Italian coastguard instructed a nearby merchant ship to go to the scene and it was when the Portuguese-registered King Jacob arrived at the scene that the fishing boat capsized, most likely as a result of the terrified passengers stampeding to one side in their desperation to get off, Ms Sami said.

A total of 17 boats scoured the area for survivors on Sunday but only 24 bodies had been recovered so far, the Italian coastguard said.

"Although we are seeing encouraging signs from European politicians, action must be taken," Mr Muscat said.

"A time will come when Europe will be judged harshly for its inaction as it was judged when it had turned a blind eye to genocide."

The EU announced an emergency meeting of foreign and interior ministers to discuss what Amnesty International described as an avoidable "man-made tragedy".

Italian prime minister Matteo Renzi called for an emergency summit of European Union (EU) leaders.

"We are working to ensure this meeting can be held by the end of the week," he said.

"It has to be a priority. We cannot remain insensitive when every day there is a massacre in the Mediterranean," he said.

The president of the European Council said he was planning to hold an emergency summit on illegal immigration in the wake of the tragedy.

Donald Tusk said on Twitter he had spoken to Mr Muscat and would discuss the immigration crisis with other EU leaders.

In indirect criticism of northern EU countries that have so far left rescue operations to southern states such as Italy, EU foreign policy chief Federica Mogherini said: "We need to save human lives all together, as all together we need to protect our borders and to fight the trafficking of human beings."

Amnesty says death toll a shock, not a surprise

Amnesty's John Dalhuisen called Sunday's accident a "man-made tragedy of appalling proportions".

"These latest deaths at sea come as a shock, but not a surprise," he said.

Amnesty is among numerous NGOs calling for the restoration of an Italian navy search-and-rescue operation known as Mare Nostrum which was suspended at the end of last year.

Italy scaled back the mission after failing to persuade its European partners to help meet its operating costs of $12.5 million per month, amid divisions over whether the mission was unintentionally encouraging migrants to attempt the crossing.

Mare Nostrum has been partially replaced by a much smaller EU-run operation called Triton which has a fraction of the assets and specialist manpower previously deployed by Italy.

The migrants seeking to reach Europe with the help of people smugglers are generally fleeing conflict or persecution in places such as Eritrea, Afghanistan and Syria, or poverty and hunger in sub-Saharan Africa and South Asia.

A migrant is helped from a coast guard boat in the Sicilian harbour of Palermo. ( Reuters )

2015 Mediterranean shipwreck death toll set to pass 1,600

The disaster is the latest in a growing number of mass drownings of migrants attempting to reach Europe on overcrowded, unseaworthy boats run by people smugglers who are able to operate out of Libya with impunity because of the chaos engulfing the north African state.

The most serious incident prior to Sunday occurred off Malta in September 2014.

An estimated 500 migrants drowned in a shipwreck caused by traffickers deliberately ramming the boat in an attempt to force the people on board onto another, smaller vessel.

In October 2013, more than 360 Africans perished when the tiny fishing boat they were crammed onto caught fire within sight of the coast of Lampedusa.

That horrific tragedy was described at the time as a wake-up call to the world but 18 months later there is no sign of a decrease in the numbers of people attempting the perilous crossing in search of a better life in Europe.

The latest disaster came after a week in which two other migrant shipwrecks left an estimated 450 people dead.

If the worst fears of Sunday's tragedy are confirmed, it will take the death toll since the start of 2015 to more than 1,600.

More than 11,000 other would-be immigrants have been rescued since the middle of last week and current trends suggest last year's total of 170,000 migrants landing in Italy is likely to be at least matched in 2015.