The Indonesian passenger ship carrying 243 people, including 30 crew, was reported missing after losing contact early on Sunday during bad weather, the search and rescue agency said.
The Virgo Transport 8 ship had set sail on Saturday from the East Java city of Surabaya to the South Kalimantan city of Banjarmasin, it said.
Indonesia's transport minister Dudy Purwagandhi told reporters on Sunday the ship had flipped and had not sunk, citing observations from the crew of a helicopter, adding the incident's cause was awaiting further investigation.
The search-and-rescue agency said earlier the ship had sunk.
It said at least 107 people were rescued and the bodies of six passengers were recovered as the search operation expanded in waters around the vessel's last known position.
I Putu Sudayana, the head of the agency's Banjarmasin office, said in a video statement evacuees had been transported on multiple ships, including to an East Java port.
Sudayana said the vessel's captain had earlier reported rough seas with waves up to three metres before issuing a distress message, saying the ship was listing.
Rescuers launched a major search, deploying ships and a helicopter toward the passenger vessel's last known position, he said.
Sudayana, who is co-ordinating the search, said the agency was working with maritime authorities and other relevant agencies while closely monitoring weather conditions in the area.
The Japanese-built Virgo Transport 8 is designed to transport both passengers and vehicles.
Indonesia, an archipelago of 17,000 islands, relies heavily on ferries as a key mode of transportation, with sea routes more affordable and available than air travel.
However, safety standards are not always enforced, resulting in a relatively high accident rate.
At least 211 people were rescued from an Indonesian ferry in August after it caught fire in rough seas near the tourist island of Bali, while one person was found dead and four others remain missing.
The incident happened less than two weeks after another Indonesian ferry, the Mutiara Sentosa 2, caught fire in waters off the main island of Java, leaving at least five people dead.
Sunday's accident comes just four days after a fire that gutted a passenger ferry in the Philippines killed at least 76 people, with more than 10 others still missing.
with AP
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