Passengers who telephoned Greek television stations gave dramatic testimony of conditions on the ship, which caught fire just before 6.00 a.m. local time (0400 GMT) while travelling from Patras in western Greece to the eastern Italian city of Ancona.
"They tried to lower some boats, but not all of us could get in. There is no coordination," one said. "It's dark, the bottom of the vessel is on fire. We are on the bridge, we can see a boat approaching... we opened some boxes and got some life vests, we are trying to save ourselves."
It was unclear whether there had been any casualties or whether any passengers were in the water, where cold winter temperatures would make survival difficult unless rescue came quickly.
The Norman Atlantic, carrying 222 vehicles, 411 passengers and 55 crew, was 44 nautical miles northwest of the island of Corfu when it sent a distress signal after a fire started in the lower deck, Greek coast guard officials said.
"The ship is already being evacuated," an official told Reuters, adding that 130 people had been transferred from a rescue boat to a container ship that had been nearby when the fire broke out.
Officials said both Italian and Albanian authorities were taking part in the operation, which was being conducted in difficult conditions with strong winds.
Seven other ships were in the area and rescue helicopters and a C-130 search-and-rescue support aircraft had also been sent.

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