So far, 373 migrants have been rescued and 25 bodies have been recovered since the boat sank Wednesday, Cmdr. Filippo Marini of the Italian Coast Guard, which is coordinating the rescue operation, told CNN.
Around 600 people are thought to have been on board the packed wooden vessel when it went down.
Irish navy Cmdr. Brian Fitzgerald told journalists Thursday that about 200 people are feared dead. Three vessels operated by the medical aid group Doctors Without Borders are aiding the continued search efforts.
"Yesterday is heavy on our minds but the boats will not stop," the organization said on Twitter on Thursday.
Rescuers don't know how many people might have been trapped in the hull of the boat, Doctors Without Borders said.
An Irish naval vessel was also involved in the rescue operation Wednesday off the Libyan coast, taking on board 367 of the survivors, 12 women and 13 children among them. They arrived in the Sicilian port city of Palermo on Thursday.
Irish Defense Minister Simon Coveney said the 25 bodies recovered were also on board. They include those of four children.
He warned Wednesday evening that the death toll was likely to rise.
"Our thoughts and prayers are with all those who have lost their lives, the survivors and the rescuers for whom this is an extremely difficult operation," Coveney said.
The ships were sent to the scene after a distress call Wednesday morning from the fishing boat, Marini said.
The boat crammed with migrants capsized as soon as the Irish vessel arrived, he said, probably because all those on board moved to one side at the same time. Rubber boats were immediately put into the water to save people as the boat went down.
Rescuer: 'Horrific sight'
Doctors Without Borders said its ship Dignity I had been called first to assist the fishing boat, then diverted to another vessel in trouble -- from which it rescued 94 people -- before being called back to help with the original boat.
"It was a horrific sight, people desperately clinging to lifebelts, boats and anything they could, fighting for their lives, amidst people drowning and those who had already died," said Juan Matías, project coordinator for Doctors Without Borders on the Dignity I.
"The fact that we were first called to assist this boat and then shortly afterward sent to another one highlights the severe lack of resources available for rescue operations."
Among those rescued was a 19-month-old Palestinian girl, along with her parents, Doctors Without Borders said. She was pulled from under the water by her father.
The Dignity I provided medical treatment to 10 people, the medical aid charity said, with five in such a severe condition that they had to be evacuated by helicopter.
It called for the creation of safe and legal ways for people to seek asylum or migrate to Europe, saying that was the only way to bring an end to such tragedies.
Marini said another 381 migrants had been rescued in a separate operation carried out by an Italian Coast Guard vessel Thursday morning.
Risking death for a better life
The boats are just the latest vessels overflowing with migrants seeking to reach European soil to get into trouble in Mediterranean waters.
More than 2,000 migrants have now died this year
as they tried to make the perilous crossing, the International Organization for Migration said in a statement Tuesday.
"As in 2014, the overwhelming majority died in the Channel of Sicily on the Central Mediterranean route connecting Libya and Italy, where unseaworthy vessels used by smugglers and traffickers significantly increase the likelihood of tragedies occurring," the organization said.
At the same time, thanks to international maritime efforts, some 188,000 migrants have been rescued in the Mediterranean so far this year, it said.