The ferry disaster off the South Korean coast looks like it could be much worse than first thought.

The coast guard now say more than 300 people are unaccounted for, a dramatic increase in the number of missing announced earlier.

More than 160 people have been rescued, but the ferry was carrying nearly 500 people – many of them high school students and teachers on a field trip from Incheon to the tourist island of Jeju, sometimes known as the “South Korean Hawaii”.

Of the passengers brought ashore, most are said to be in good condition but at least two people are confirmed dead.

Navy, coastguard and other ships as well as helicopters are involved in the rescue.

It’s not known what caused the ferry to list and capsize in apparently calm conditions. One witness said there was a “loud impact and noise” before it started sinking.

Heavy fog had set in overnight leading to cancellations of many ferry services to the islands.

As the ferry sank, terrified passengers in lifejackets took to lifeboats; others jumped into the water where rescuers apparently including local fishermen took them on board.

Elsewhere there were scenes of chaos at a school south of Seoul as desperate parents clamoured for news of their children.