At least 13 asylum seekers drowned when a boat believed to be carrying around 60 people sank 65 nautical miles north-west of Christmas Island.
A massive air and sea search is being carried out for survivors.
It is understood 60 people were on board the vessel. The search and rescue operation will continue throughout the night.
The ABC reports an RAAF plane spotted a submerged hull late on Friday during a search for an asylum seeker boat which had been seen approaching Christmas Island.
Three aircraft, HMAS Warramunga and two merchant vessels are searching the ocean for survivors.
Nine bodies were seen in the water from a Customs plane on Saturday afternoon. Another four bodies were found later.
Customs and Border Protection said in a statement on Saturday night the focus was on finding survivors.
In a separate incident, the ABC reports more than 70 asylum seekers were rescued from a stricken boat off Cocos Island on Thursday. They were picked up by a tanker which is heading to Christmas Island.
There has been a steady stream of asylum seeker boats in recent months. The last major incident was in March when two asylum seekers died after a boat carrying 95 people capsized near Christmas Island.
Last June, 17 bodies were recovered and 85 people were reported missing, presumed dead after a boat carrying more than 200 people sank northwest of Christmas Island.
And 50 asylum seekers were killed on 15 December, 2010 when their boat crashed onto the rocks on Christmas Island after the boat's engine failed.