The boat sank about 220 kilometres north of Christmas Island, where Australia operates a detention camp for asylum seekers.
According to the Australian Maritime Safety Authority (AMSA) spokeswoman, Navy vessel conducted a rescue operation with support from a Customs Dash-8 aircraft.
A report also said that HMAS Parramatta had been dispatched at the scene to conduct rescue operations.
"Over 100 rescued"
The AMSA said that more than 100 people were rescued from the water, with two suffering minor injuries.
Meanwhile, the search operations for the remaining people is still underway.
This is the first reported boat accident in Australian waters since Labor announced its new asylum seeker policy in late July.
(With Agency inputs)