Three navy vessels and an air force plane were on their way to the scene of Wednesday's sinking to search for survivors, Rear Admiral Yusuf Malik said.
"If the life belts and lifeboats were functioning well, we hope we can find people alive," he said.
Malik said it was too early to speculate on the cause of the accident.
The ferry went down close to Rote island, around some 2000km east of Jakarta, he said.
Reuters said the ferry was carrying 105 people and quoted a port official as saying that naval vessels had been called in to search for it.
El Shinta radio station said the vessel had sunk.
The port official, Syamsir Siahaan, told El Shinta that one person had been rescued. He said there were 82 passengers and 23 crew on board.
The vessel was travelling from Kupang on Indonesia's side of Timor island to Pulau Rote when officials lost contact with it on Tuesday night, Siahaan said.