The Australian Maritime Safety Authority said they received a request for assistance from someone onboard Tuesdaymorning and a navy ship responded.
“The vessel was 120 nautical miles north of Christmas Island with reportedly 105 people on board,” an AMSA spokeswoman said, adding that an alert was issued to shipping in the area.
“HMAS Parramatta arrived on scene at around 12:20 pm (0230 GMT) and reported the vessel had foundered.”
The spokeswoman said a rescue operation was underway with support from a Australian Customs Dash-8 aircraft with another navy ship and a merchant vessel also steaming to the scene.
“This is an ongoing search and rescue operation and no further information is available at this stage,” she added.
Asylum-seekers are a deeply sensitive issue in Australia as numbers increase, with more than 18,000 arriving so far in 2013, according to official figures.
Hundreds have drowned en route.