Three people died but another 157 suspected asylum seekers were rescued after their boat sank off the southern coast of Indonesia, officials said on Wednesday after earlier reports that as many as 60 may have perished.

The latest case of a boat sinking while attempting the perilous journey came five days after Australia slammed the door on would-be refugees with a deal to send all boat arrivals to Papua New Guinea for assessment and eventual settlement.

The debate over refugees and people smuggling has long been a hot political issue in Australia and has intensified with an election looming in a few weeks.

Earlier on Wednesday, News and other Australian media reported that the boat was carrying as many as 170 people and that up to 60 were feared dead or missing.

Indonesian emergency authorities however said later that 160 people were on board and that three had died, two women and a 12-year-old boy from Sri Lanka.

"(The survivors) have been taken to a temporary immigration holding facility ... They seem fine," Rochmali, the head of the search and rescue office for West Java, told Reuters.

There were also conflicting reports about the nationalities of those on board. They were described variously as coming from Iran, Iraq and Bangladesh, as well as Sri Lanka.

The boat capsized late on Tuesday after hitting a reef off the coast of Sukapura, about 270 km (170 miles) south of the capital Jakarta, said Rochmali, who like many Indonesians uses one name.

Since 2001, about 1,000 people have died while trying to reach Australia's Indian Ocean territory of Christmas Island in unseaworthy boats. More than 15,000 asylum seekers have arrived by boat in Australian territory this year.

On Friday, Canberra announced tough new measures to stem a sharp increase in the number of refugee boats heading for Australia from Indonesia.

The new plans have been condemned by human rights groups, with Amnesty International accusing it of shirking its moral obligations to help the world's most vulnerable people.

Shortly after Prime Minister Kevin Rudd visited Indonesia this month, Jakarta said it would stop giving Iranians visas on arrival, making it harder for them to use the Southeast Asian country as a route to seek refuge in Australia.

Australia last year reopened immigration detention centres on Manus Island in Papua New Guinea, and on the remote South Pacific island nation of Nauru, in order to deter boat arrivals.

A former guard at Manus Island told Australian television on Tuesday of the poor conditions on Manus and said detainees were sexually abused and tortured by other inmates with no intervention by staff.

Australian Immigration Minister Tony Burke said he would travel to Manus to inspect conditions, but said Australia remained committed to expanding the Manus detention centre and to sending all boat arrivals to Papua New Guinea.

The UN High Commissioner for Refugees (UNHCR) earlier this month found major shortcomings with the Manus centre, with cramped living quarters and asylum seekers reporting issues with the heat, privacy, hygiene and access to medical services. - Reuters