The owners of an Egyptian ferry that has sunk in the Red Sea with more than 1,400 people on board claim that between 300 and 400 have been found alive.

"We have found them and we took them on board one of our ships which was sent to take part in the rescue operation," said Mohammed Helmy, from the Al-Salam Maritime Transport company.

Four Egyptian rescue ships reached the scene about 10 hours after the passenger ship Al-Salam Boccaccio 98 went down during the night amid stormy weather. Rescuers have also reported finding dozens of bodies floating in the water after the sinking.

Hosni Mubarak, the President of Egypt, has ordered an immediate inquiry into the accident, questioning whether safety regulations had been obeyed. Suleiman Awad, President Mubarak's spokesman, said that the Egyptian government wanted guarantees that other similar ships comply with safety regulations.

"The speed at which the ship sank and the fact there were not enough life rafts on board confirm that there was a (safety) problem but we cannot anticipate the results of the investigation," said Mr Awad

Egyptian and Saudi rescue teams have had to battle high winds and falling darkness as they struggled to find survivors from the ferry, which sank 40 miles off the Egyptian diving resort of Hughada, at around 3am local time (0000GMT).

As darkness descended at the site, 17 hours after the tragedy occurred, there were fears that the death toll could be extremely high. Experts warned that any survivors still in the Red Sea could go into shock, as temperatures fell in the already cold waters, which average in the upper 60s Fahrenheit (around 19C) in February. Sea currents in the area are strong.

Rescue efforts appeared confused. Egyptian officials initially turned down a British offer to divert a warship to the scene to help, and also a US offer to send a P3-Orion maritime naval patrol aircraft to the area. The British craft, HMS Bulwark, was already steaming towards the scene but turned around when the offer was rejected.

Then Egypt changed its mind, and asked for both the Orion and the Bulwark to be sent, said Commander Jeff Breslau, a spokesman for the US 5th Fleet, based in Bahrain. Bulwark is part of a Dutch-controlled multinational task force, which includes assets from the 5th Fleet and British navy.

Saudi ships were patrolling waters off their shore to hunt for survivors, but found none, a senior Saudi security official said

Egyptian officials said earlier that only around 100 of the 1,310 passengers and 105 crew on board have been found alive, clinging to five life boats launched as the vessel capsized, miles from its destination of Safaga, in southern Egypt. A spokesman for the Egyptian Embassy in London, Ayman al-Kaffas, told the BBC that "dozens of bodies had been pulled out of the water".

Controllers lost radar contact with the 35-year-old roll-on/roll-off ferry around two hours after it left Duba, a port in western Saudi Arabia, at 7pm last night (1600GMT). RAF Kinloss, a search and rescue centre in Scotland, picked up a distant distress signal at 2358GMT which was immediately passed on to the Egyptian authorities.

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