The Australian Maritime Safety Authority is helping Indonesian and Malaysian agencies after two boats reported being in distress in their waters.
Hundreds of people believed to be heading to Australia are reportedly aboard the vessels, but there is no confirmation at this stage that they are asylum seekers.
A rescue operation is underway to help the roughly 270 people on board the two boats.
The operation is being led by search and rescue authorities from Malaysia and Indonesia.
The Australian government says its navy ship HMAS Armidale has made contact with the vessel 296 nautical miles north-northwest of Christmas Island and 120 nautical miles from Sumatra.
A spokesperson for Home Affairs Minister said that all people on board the vessel are safe and no major medical problems have been identified.