Merchant and navy ships and five aircraft have resumed the search for almost 100 people missing in the Indian Ocean, a day after a crowded refugee boat capsized between Indonesia and Australia's Christmas Island territory.

Australian Home Affairs Minister Jason Clare said 109 people had been rescued, including a 13-year-old boy, with three dead bodies pulled from the water, around 200km north of Christmas Island.

As rescue efforts continued on Friday, Clare said the prospect of finding anyone else alive was looking "increasingly grim".

"A surveillance plane has seen more debris and lifejackets in the water. Some are floating on their own, some of them that have people wearing them, and they have identified more bodies in the water," he told Sky News.

"Unfortunately, I can't report that any more survivors were seen alive in the water at this time.

Julia Gillard, Australia's prime minister, attending the UN Rio summit in Brazil, said she had spoken to Susilo Bambang Yudhoyono, Indonesia's president, about the details surrounding the tragedy.

'Large loss of life'

"At this stage details are sketchy, but what is apparent is that there has been a large loss of life at sea," Gillard told reporters in Rio de Janeiro.

Customs said on Thursday that a border patrol aircraft spotted the vessel in distress in Indonesia's search and rescue zone at about 05:00 GMT and "it is believed up to 200 people could be on board".

So far this year, 62 vessels carrying 4,484 boatpeople have been intercepted off Australia.

Arrivals have increased steadily since Australia was forced to abandon a so-called "people swap" deal with Malaysia by its high court last year and roll back its mandatory detention policy for boatpeople.

The government has had to release hundreds of asylum-seekers into the community while their applications are processed due to the strain on detention centres, the budget for which has now spiralled above US$1 billion

Refugees seeking asylum in Australia often set sail from Indonesia heading for Australia's Indian Ocean territory of Christmas Island in dangerous and overcrowded boats with the help of people smugglers.

In December 2011, as many as 200 died when an overcrowded boat sank off the coast of East Java. In 2010, 50 asylum seekers died when their boat was thrown onto rocks at Christmas Island. In 2001, a crowded boat known as the SIEV X sank on its way to Australia with the loss of 350 lives.