Australian authorities boarded a boat packed with asylum seekers off Indonesia and began transferring the 164 on board to a navy ship after the vessel ran into trouble in rough seas.
Australia's Customs and Border Protection agency said two military ships, the HMAS Wollongong and HMAS Leeuwin reached the rickety vessel as night fell on Wednesday in waters south of Java after the boat had issued a distress call.
"A boarding party from HMAS Wollongong has boarded the vessel and initial reports are that 164 people are on board," the agency said in a statement.
"Due to concerns about the seaworthiness of the vessel attempts are being made to transfer the people from the vessel to HMAS Leeuwin," it added.
"Continuing rough sea conditions will mean the transfer may take several hours."
Someone on board had used a satellite phone to make a distress call to the Australian authorities saying the boat was taking on water as it was pounded by three-metre waves.
The latest in a series of incidents concerning asylum boats north of Australia's remote Christmas Island territory, it came one day after Jakarta and Canberra agreed to boost cooperation on such rescues following a recent spate of deaths.
More than 90 asylum seekers are estimated to have drowned when two vessels went down in the waters between Christmas Island and Indonesia in separate incidents in recent weeks.
AMSA said it had been coordinating efforts with Indonesia's search and rescue authority Basarnas. It earlier said the vessel was thought to be about 116km southwest of West Java and 370km northwest of Christmas Island.
The location is within Indonesia's maritime search and rescue zone.
"We have received information about a boat in distress from Australia, but we are not in touch with the boat and have no other information about it," Basarnas spokesman Gagah Prakoso said before the boat was found.
"We are getting ready to send a C-130 Hercules plane to drop off things like life jackets to the stricken boat. We also have 150 personnel getting ready for rescue efforts."
AMSA said after receiving the distress call it had issued a broadcast to ships in the area, advised the stricken vessel to head for the nearest land and requested assistance from Australian border protection ships and aircraft.
Jason Clare, Australia’s home affairs minister, earlier said the vessel was motoring its way back to Indonesia but authorities were taking the distress call seriously.
"The boat has rung, said it's in distress, that it's taking on water," he told the Australian Broadcasting Corporation. "Whenever you have a call like that, you take it seriously.
"If the vessel is sinking, if the vessel cannot make it back to Indonesia, we will have HMAS Wollongong on the scene, as well as any merchant vessels that might be available, to rescue the people on the boat."
More than 5,200 asylum-seekers have come to Australia so far this year on boats, many of which are fragile, wooden vessels from transit hubs in Indonesia.
Canberra's bid to deter people smugglers from making the dangerous voyage to Australia by sending asylum-seekers to Malaysia for processing has so far failed to be passed by parliament, despite the recent fatalities.
The conservative opposition, whose support the government needs to pass the bill, opposes the plan on the grounds that Malaysia is not a signatory to UN refugee conventions.