A total of 103 bodies have been recovered and more have been found inside the wreck, coast guards say.
Passengers reportedly threw themselves into the sea when a fire broke out on board. More than 150 of the migrants have been rescued.
Most of those on board were from Eritrea and Somalia, said the UN.
The boat was believed to have been carrying up to 500 people at the time and some 200 of them are unaccounted for.

It is thought that some of those on board set fire to a piece of material to try to attract the attention of passing ships, only to have the fire spread to the rest of the boat.
Simona Moscarelli, a spokeswoman from the International Organization for Migration in Rome, told the BBC that in order to escape the fire, "the migrants moved, all of them, to one side of the boat which capsized".
She estimated that only six of about 100 women on board survived, adding that most of the migrants were unable to swim.
"Only the strongest survived," she said.
It is one of the worst such disasters to occur off the Italian coast in recent years; Prime Minister Enrico Letta tweeted that it was "an immense tragedy". The government has declared a day of national mourning on Friday.
"There is no miraculous solution to the migrant exodus issue," said Italian Foreign Minister Emma Bonino. "If there were we would have found it and put it into action."
Earlier this week, 13 migrants drowned while trying to reach Sicily.
'Continuous horror' Footage from Lampedusa showed bodies being laid out on the dockside.
The mayor, Giusi Nicolini, described the scene as a "continuous horror".
"It's horrific, like a cemetery, they are still bringing them out," she said, according to Reuters.
The boat went down a few hundred metres from the shore of the island and divers said they found 40 bodies in and around the sunken boat on the sea bed.
Mr Alfano said at least three children and two pregnant women were among the dead. Local media reported that a suspected people smuggler had been arrested.
Pope Francis sent a Twitter message calling for prayers for the "victims of the tragic shipwreck off Lampedusa". In July he visited the island and condemned the "global indifference" to the plight of migrants trying to arrive there.
In a later audience at the Vatican, he said: "The word is disgrace: This is disgrace!"
In a statement UN High Commissioner for Refugees Antonio Guterres commended the swift action taken by the Italian coast guard to save lives.
Mr Guterres also expressed "dismay at the rising global phenomenon of migrants and people fleeing conflict or persecution and perishing at sea".
At this time of year, when the Mediterranean tends to be calmer, vessels carrying migrants from Africa and the Middle East land on Italy's southern shores almost every day, the BBC's Alan Johnston reports from Rome.
But often the vessels are overcrowded and are not seaworthy.
The UN said that in recent months most migrants attempting the crossing were fleeing the conflicts in Syria and the Horn of Africa, rather than coming from sub-Saharan Africa.

The main nationalities of those arriving were Syrian (7,500), Eritrean (7,500) and Somali (3,000).
On Wednesday a draft report from human rights body the Council of Europe said that Italy was "ill-prepared for a new surge of mixed migration on its coasts".
Italy's system for receiving and processing migrants and asylum seekers was not fit for purpose, a council committee on immigration said.