Didi Hamzar, a spokesman for Indonesia's Basarnas search-and-rescue agency, said 157 people were rescued and more information was being gathered about what happened to passengers on the boat, which capsized Tuesday night west of Java, sending at least 160 people overboard, The New York Times reported.
He said an unknown number of people were unaccounted for.
"We hope to get more information about how many people were actually on board," the spokesman told the Times.
The incident is a major test of a tough new policy announced last week by Australia Prime Minister Kevin Rudd designed to discourage thousands of asylum seekers from venturing into unsafe waters to get to Christmas Island, a territory in the Indian Ocean that is Australia's closest point to Indonesia. Under the policy, all asylum seekers arriving in Australia by boat and without visas will be sent to refugee processing centers in Papua New Guinea. If it is determined they are entitled refugee status under the U.N. convention on refugees, they will be resettled in Papua New Guinea, forfeiting their right to seek asylum in Australia.
Rudd said the incident underscored the need for his new policy, which was criticized on humanitarian grounds.
"This underlines the need for policy changes in Australia on asylum seekers policy to send a very clear message to people smugglers to stop sending people by boat to Australia," he told reporters in Melbourne Wednesday.
Australian broadcaster SBS aired a scathing report Tuesday about abuse at the Australian-run detention center on Papua New Guinea's Manus Island. In the report, a former detention center employee described what he said was the rape and torture of detainees.