The ferry, carrying mainly school students, was travelling from the port of Incheon, in the north-west, to the southern resort island of Jeju.
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Analysis
image of Martin Patience Martin Patience BBC News, Seoul
South Korean TV networks are constantly replaying dramatic footage of the rescue efforts before the ferry sinks. It shows an armada of small boats motoring right up beside the ferry, which listed heavily on its side before sinking.
Rescuers are seen desperately grabbing teenagers out of the water before they are swept away by the currents and undertow. Other footage shows helicopters throwing orange life rafts to passengers bobbing on the sea. Some of the passengers are then winched to safety.
What makes this accident even more distressing is the fact that among those on board were high school students on a trip to a holiday island.
Relatives and friends of those on board are posting on social media sites asking for any news or information about loved ones.
On Facebook many South Koreans are re-posting a yellow ribbon to symbolise the hope that the missing may still be found alive. Dramatic rescue
Emergency teams are using floodlights and flares to search the stricken vessel through the night. Those rescued have been taken to a nearby island.
Four people are now said to have died and dozens of others have been hurt.
South Korean officials had earlier said that 368 people had been plucked to safety, but later said there had been a counting error.
They have now revised down the number rescued to 174.
Images showed the ferry listing at a severe angle and then later almost completely submerged, with only a small part of its hull visible. It sank within two hours of sending a distress signal, reports said.
There are fears this could turn out to be South Korea's biggest maritime disaster for more than 20 years, says the BBC's Martin Patience in Seoul.
Cause unclear
Several coast guard, military and commercial vessels were involved in the rescue effort, which unfolded rapidly on Wednesday morning.
Pictures from the scene showed rescue teams balanced on the sinking hull pulling teenagers from cabin windows. Some of their classmates jumped into the sea as the ship went down.
Reports suggest some of those rescued were picked up by nearby commercial vessels.
The US Navy has sent an amphibious assault ship, the USS Bonhomme Richard, to assist with the search, officials say.
Continue reading the main story
Analysis
image of Martin Patience Martin Patience BBC News, Seoul
South Korean TV networks are constantly replaying dramatic footage of the rescue efforts before the ferry sinks. It shows an armada of small boats motoring right up beside the ferry, which listed heavily on its side before sinking.
Rescuers are seen desperately grabbing teenagers out of the water before they are swept away by the currents and undertow. Other footage shows helicopters throwing orange life rafts to passengers bobbing on the sea. Some of the passengers are then winched to safety.
What makes this accident even more distressing is the fact that among those on board were high school students on a trip to a holiday island.
Relatives and friends of those on board are posting on social media sites asking for any news or information about loved ones.
On Facebook many South Koreans are re-posting a yellow ribbon to symbolise the hope that the missing may still be found alive. Dramatic rescue
Emergency teams are using floodlights and flares to search the stricken vessel through the night. Those rescued have been taken to a nearby island.
Four people are now said to have died and dozens of others have been hurt.
South Korean officials had earlier said that 368 people had been plucked to safety, but later said there had been a counting error.
They have now revised down the number rescued to 174.
Images showed the ferry listing at a severe angle and then later almost completely submerged, with only a small part of its hull visible. It sank within two hours of sending a distress signal, reports said.
There are fears this could turn out to be South Korea's biggest maritime disaster for more than 20 years, says the BBC's Martin Patience in Seoul.
Cause unclear
Several coast guard, military and commercial vessels were involved in the rescue effort, which unfolded rapidly on Wednesday morning.
Pictures from the scene showed rescue teams balanced on the sinking hull pulling teenagers from cabin windows. Some of their classmates jumped into the sea as the ship went down.
Reports suggest some of those rescued were picked up by nearby commercial vessels.
The US Navy has sent an amphibious assault ship, the USS Bonhomme Richard, to assist with the search, officials say.
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