The Australian Maritime Safety Authority says the search is continuing for an asylum seeker boat which issued a distress call while on its way to Christmas Island.

The Australian Navy ship HMAS Wollongong has been sent to search for the boat, which is thought to be carrying up to 180 people.

Passengers on the boat told AMSA the engine failed and the boat was taking on water about 50 nautical miles south of Indonesia.

HMAS Wollongong has arrived in the area, but is having trouble locating the vessel.

Earlier the Federal Government said AMSA received a distress call from the boat at about 4:30am AEST.

It has issued a call to all commercial ships in the area to help with any potential rescue.

There are mixed reports about how many people are on board, but the boat is believed to be carrying somewhere between 130 and 180 asylum seekers.

This morning Home Affairs Minister Jason Clare said the vessel appeared to be trying to return to shore.

"The latest advice I've got is that the boat is still motoring along and it's turned back towards Indonesia," Mr Clare told ABC Radio National.

"If the vessel is sinking, if the vessel cannot make it back to Indonesia, then we will have HMAS Wollongong on the scene - as well as any merchant vessels that might be available - to rescue the people on the boat."

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During the past fortnight, there have been two asylum seeker boat tragedies in a similar area that have claimed the lives of dozens of people.

It has prompted Australia and Indonesia to pledge stronger cooperation aimed at stopping asylum seekers trying to make the dangerous boat journey.

Australia has also offered to help Indonesian authorities upgrade their communication systems so there can be better coordination between the two countries when there are safety-of-life-at-sea incidents.