Australia launched a rescue operation after receiving a distress signal on Sunday night from a ship 350 nautical miles northwest of the Cocos Islands, an Australian territory.

"The Rescue Coordination Centre reports that the vessel has sunk and up to 40 people may have been in the water at one stage," a spokesman for Home Affairs Minister Brendan O'Connor told local media.

At least 15 people had been rescued by a merchant ship in the area, which reported that the ship had sunk by the time it arrived on the scene, said Australian Broadcasting Corp radio.

It was unclear where the sunken ship was heading or whether it was carrying asylum seekers.

A constant stream of boatpeople have arrived off Australia's remote northwest coast this year, with authorities forced to rescue several from unseaworthy boats. More than 1,600 boatpeople have arrived off Australia's northwest coast this year, mainly people fleeing violence in Afghanistan and Sri Lanka.

Reuters