At least five people were killed and 41 others remained missing after a passenger ferry carrying 271 people caught fire off Indonesia's main island of Java on Sunday, officials said.

The Mutiara Sentosa 2 ferry was travelling from Surabaya in East Java to Makassar in South Sulawesi with 232 passengers and 39 crew members when the fire broke out between 6 am and 7 am in waters off Sumenep regency, according to Indonesia's National Search and Rescue Agency (Basarnas).

The ferry operator alerted rescuers about an hour later after receiving a distress report from the vessel's captain. However, communication with the ferry was later lost.

Authorities located the burning ferry about 19 nautical miles north of Buruan Sapudi Island. A nearby cargo ship was unable to get close because it was carrying flammable cargo.

Videos released by rescuers and shared on social media showed thick black smoke and flames engulfing much of the ferry as frightened passengers wearing life jackets waited for help or jumped into the sea.

A tugboat and other nearby vessels began rescuing passengers shortly before 10 am.

By Sunday afternoon, rescuers and nearby ships had evacuated 225 passengers and crew members and recovered five bodies. At least 41 people were still unaccounted for.

The cause of the fire was not immediately known and remains under investigation.

The National Search and Rescue Agency dispatched a rescue ship from Surabaya, while the Indonesian Navy sent a warship to assist in the operation. A rescue boat from Sumenep was forced to return because of rough seas and high waves.

The 160-metre ferry operates on the Surabaya-Makassar route, a journey of around 40 hours that is widely used by domestic passengers and cargo transport.

Indonesia, an archipelago of more than 17,000 islands, relies heavily on ferry services, although maritime accidents are frequent due to poor enforcement of safety regulations.