Seoul - South Korean officials said as many as 295 people were still unaccounted for after a ferry carrying 477 passengers and crew capsized off the south coast on Wednesday.
As the government retracted an earlier announcement that 368 people had been rescued, the South Korean coastguard said it could only confirm 180 had been brought to safety.
"Our official tally is 180. We have no idea where that 368 figure came from," a coastguard spokesperson said.
Two people were confirmed dead.
Dramatic television aerial footage showed terrified passengers wearing life jackets clambering into inflatable boats as water lapped over the rails of the vessel as it sank.
Many appeared to have been rescued by fishing and other commercial vessels who were first on the scene before a flotilla of coastguard and navy ships arrived, backed by helicopters.
The 6 825-tonne ferry, which had sailed out of the western port of Incheon on Tuesday evening, ran into trouble some 20km off the southern island of Byungpoong.
Coastguard officials said they had received a distress call at 09:00. The weather conditions were described as "fine" with moderate winds and sea swell.
The cause of the accident was not immediately clear, although rescued passengers reported the ferry coming to a shuddering halt after hearing a loud noise - indicating it may have run aground.
Photos broadcast on television showed the ship initially tilted by more than 45 degrees on the port side with helicopters flying overhead, and then fully capsized with only a small section of the stern showing above the water.