The Queen has sent a message of sympathy to the Governor-General of Papua New Guinea following the sinking of a ferry, Buckingham Palace said tonight.

The boat carrying 350 people sank off Papua New Guinea on Thursday, and while nearly 250 survivors have been rescued, more than 110 people are still missing.

Many of the missing may still be in the vessel, which is now at the bottom of the sea.

The MV Rabaul Queen sank in rough seas and waves and strong winds hampered rescue efforts.

PNG's National Maritime Safety Authority said the passenger ferry was between the northern coastal towns of Lae and Kimbe when it sent a distress signal.

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.

Governor-General Sir Michael Ogio is the Queen's representative in Papua New Guinea.