A day after nearly 250 survivors were rescued when a ferry sank off Papua New Guinea, crews searching for more than 110 missing people have found no further survivors.

It is feared many of the missing are still in the vessel, which is now at the bottom of the sea.

The MV Rabaul Queen sank in rough seas, and large waves and strong winds have continued to make rescue efforts difficult.

However, Captain Nurur Rahman, rescue co-ordinator for the National Maritime Safety Authority (NMSA), said he had not given up hope.

"I do not presume them to be dead yet," he told the Australian Broadcasting Corporation.

Rony Naigu, an NMSA official, told ABC about 100 people are thought to have been trapped inside when the ship was hit by three large waves and sank.

"The sea was really rough, windy, big waves. The boat tilted once, then twice, then three times and it went over," said Alice Kakamara, who was recovering in a Lea hospital after inhaling toxins during the sinking. There was oil everywhere," she said.

Ms Kakamara said she might not have survived had she not been with her 11-year-old nephew, who urged her not to give up. They found a lifeboat, but it too was sinking. She said she put the boy on another boat and has heard from relatives that he is well.

The ferry's owners, Papua New Guinea-based Rabaul Shipping Company, said there had been 350 passengers and 12 crew aboard the 22-year-old Japanese-built ferry when it went down while travelling from Kimbe on the island of New Britain to the coastal city of Lae on the main island. A police official said most of those aboard were students.

"We are stunned and utterly devastated by what has happened," managing director Peter Sharp said in a statement. The company said the cause of the disaster remained unclear, but National Weather Service chief Sam Maiha told Papua New Guinea's Post-Courier newspaper that shipping agencies had been warned to keep boats moored this week because of strong winds.