Three people died but another 157 suspected asylum seekers were rescued after their boat sank off the southern coast of Indonesia, officials said on Wednesday after earlier reports that as many as 60 may have perished.

The latest case of a boat sinking while attempting the perilous journey came five days after Australia slammed the door on would-be refugees with a deal to send all boat arrivals to Papua New Guinea for assessment and eventual settlement.

The debate over refugees and people smuggling has long been a hot political issue in Australia and has intensified with an election looming in a few weeks.

Earlier on Wednesday, News Ltd and other Australian media reported that the boat was carrying as many as 170 people and that up to 60 were feared dead or missing.

Indonesian emergency authorities however said later that 160 people were on board and that three had died, two women and a 12-year-old boy from Sri Lanka.

The boat capsized late on Tuesday afte