Update: 11:01AM Twenty-seven people were still unaccounted for, nearly 10 hours after the MV Princess Ashika ferry sank off the coast of Tonga, NZPA is reporting.
The news service said a major search operation involving New Zealand's Rescue Coordination Centre was conducted after the ferry sank 86kilometres northeast of Nukualofa containing 79 people.
Maritime New Zealand spokesman Neville Blackmore told Radio New Zealand that five minutes after the mayday, a distress beacon alert was picked up from the vessel.
RNZ reported that first boats to reach the scene took 42 people from liferafts - 17 passengers and 25 crew, including the captain, with another 10 found later.
Mr Blackmore told RNZ that seven liferafts had been recovered out of a total of eight.
"It looks like we are looking for people in the water," he told Radio New Zealand.
Matangi Tonga reported that the maiden voyage for MV Princess Ashika was on July 4 this year to Ha'apai and Vava'u with 360 passengers.
According to earlier reports by Radio Tonga MV Princess Ashika was bought out of Fiji to service Tonga's domestic shipping route.
It said the vessel currently owned by Shipping Corporation of Polynesia Ltd was built in Japan in the late 1970s.
Tonga Radio reported that the company stated in June that MV Ashika was still in very good condition and had been highly maintained over the years.
Princess Ashika was previously owned by Patterson Brothers Shipping Company Limited of Fiji.
- More to come on this story