Rescuers picked up 47 people, including a heavily-pregnant woman after the overloaded boat, which left Libya two days ago, sank at about 4:00am (0200 GMT) 40 miles south of the island of Lampedusa.
According to the International Organisation for Migration, a migrant assistance agency which has officials on Lampedusa, an Italian fishing boat rescued another three people.
Between 15 and 20 bodies were seen in the water, officials said but high winds and rough seas made it difficult for coast guard boats and a police helicopter to operate.
Coast guard officials said the boat had originally been carrying around 200 people but the IOM put the figure as high as 300, of whom it said some 250 were missing.
The incident provided a stark illustration of the dangers run by desperate people who pay about £875 ($1,427) for a place on one of the overloaded fishing vessels carrying refugees and migrants from Africa.
'The vessel, which was laden beyond capacity, had left the Libyan coast with migrants and asylum seekers from Somalia, Nigeria, Bangladesh, Cote d'Ivoire, Chad and Sudan,' IOM said in a statement.
'Some 40 women and five children were on board. Only two women survived the shipwreck.'
On Monday, the United Nations refugee agency said more than 400 people fleeing Libya on two boats were missing.
Thousands have crossed so far this year after the collapse of the former Tunisian regime and fighting in Libya brought down strict border checks that had previously barred the way into Europe.
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