Brendan Nelson, the Australian defence minister, said immigration officials were working to determine the identities of those rescued, whether they were trying to enter Australia illegally and where the boat came from.
The boat's passengers were forced to swim from their 10-metre wooden boat after the engine failed and it began sinking near an offshore oil facility 650km west of Darwin, before they were rescued by two navy vessels.
Brigadier Andrew Nikolic, a military spokesman, said the navy "noted that the boat was overcrowded and unstable with an unserviceable engine".
"It had limited provisions on board and was taking on water," he added.
The incident comes just days before a crucial national election, with opinion polls suggesting the inumbent conservative government led by John Howard, the prime minister, will lose to the opposition Labour party.
Howard maintains a hard line against illegal arrivals. His refusal to accept more than 400 mostly Afghan asylum-seekers in 2001 boosted his ratings and was seen has helping his party to victory in that year's election.
The last group of asylum-seeking boat arrivals - 83 Sri Lankans - was intercepted near Christmas Island in February and one critic and refugee advocate has already questioned the timing of the latest incident.
"I have no proof but I think on these matters we have to have a healthy scepticism and suspicion of government intentions," Pamela Curr told the Australian Associated Press on Wednesday.
"The government has used the refugee and asylum-seeker issue since the 2001 election as a tool in their favour. As they face oblivion, why would they not reach for it again? It worked before."
Surveillance of waters
The Australian government currently runs operations in Indonesia aimed at stopping asylum-seekers before they reach Australian waters and conducts surveillance of waters between Australia and Indonesia.
Asylum seekers intercepted at sea are taken to detention camps on small Pacific Island nations including Nauru and Papua New Guinea for refugee processing in a policy strongly criticised by human rights groups and the United Nations.
Kevin Rudd, the Labour party leader, has pledged to shut down the Nauru detention camp if he defeats Howard's government on Saturday.